Monday, March 30, 2020

4Front Announces Management Changes, Updated Capital Plan and Strong Business Performance

Company is on track for achieving positive cash flow in the second half of 2020.

PHOENIX, Ariz., March 30, 2020 – 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) (“4Front” or the “Company“) announced today that as part of its focus on continually increasing operational excellence, reducing capital and operating expenses, and achieving positive cash flow in the second half of 2020, a number of changes have been put in place. The Company also announced strong business trends, corporate overhead reductions and divestiture of non-core assets.

In order to further the focus on operational excellence, the Company’s Board of Directors appointed Leo Gontmakher, previously Chief Operating Officer, to the position of Chief Executive Officer. Former CEO Josh Rosen, will transition to Executive Chairman of the Board of Directors. Nicolle Dorsey, former Executive Vice President of Finance will become the Company’s Chief Financial Officer, replacing former CFO Brad Kotansky.

Mr. Gontmakher co-founded Northwest Cannabis Solutions, which under his leadership grew to be one of the largest and most successful producers of cannabis products in Washington State. He served as Chief Operating Officer at Cannex, which merged with 4Front in July 2019. He has significant experience in cannabis facility design, construction management, equipment sourcing, operations, branding, sales and marketing strategy, and software solutions.

Mr. Rosen commented, “As CEO, it’s been my job to recognize the business needs, including identifying our core capabilities, potential holes and how they map to the market opportunities available. I wholeheartedly believe we have the best team in the industry at efficient, quality indoor cannabis cultivation and low cost finished goods manufacturing. Going back to the early days of 4Front, Kris Krane and I frequently referenced our prioritization on being the best over being the biggest. The legacy Cannex team, complemented by legacy 4Front talent, has executed on what I believe is one of the biggest challenges in the industry, replicating cultivation and manufacturing performance across multiple geographies.  I am confident that we’re on the correct path. When mixed with the current retrenchment within our industry, now is the time to more fully empower and support Leo and his core team, making us truly an operator-led company at the top, and allowing me to focus on those areas that maximally leverage my strengths.”

Mr Gontmakher commented, “Following the merger of Cannex with 4Front, we have successfully integrated our operations to become one company and one team. I’m excited to help us take the next step with our laser focus on operational excellence and will continue to lean heavily on Josh and the rest of the leadership team for support.”

Ms. Dorsey was hired by the company as Executive Vice President of Finance in September 2019 with the intended goal of becoming CFO. Prior to joining 4Front, she served as Principal Accounting Officer and Controller at RGS Energy, a publicly traded solar energy company. Her accounting background includes serving as both assistant controller and senior corporate accountant for several public and private companies in various utility and energy industries. Ms. Dorsey has extensive knowledge of technical accounting, financial forecasting, financial analysis, and business operations. She also worked for Cloud Peak Energy, a publicly held coal-producing company, as a senior accountant, and she is a licensed certified public accountant and has a BBA degree in accounting and a Master of Accountancy from the University of Wisconsin.

“We hired Nicolle with the intention that once familiar with our industry and our company that she would become our CFO. Under the leadership and guidance of both Josh and Brad, Nicolle has advanced tremendously and is now fully ready for this role. I’m grateful for Brad’s commitment and dedication to the Company through this transition,” Mr. Gontmakher commented. “With her extensive public company experience and familiarity with our business, we made the decision that now was an appropriate time to elevate Nicolle to her new role as CFO. We couldn’t be more pleased to have her in a position to further leverage her talents as CFO.”

Aggressive Expense Reduction

Consistent with previously announced plans to drive revenue growth and profitability through a focus on core assets and to become cash flow positive in the second half of 2020, the Company began a series of material expense and overhead reduction initiatives.

Over the past four months, corporate headcount has been reduced by nearly 40%, and headcount related to overhead in the Mission stores has been reduced by 45%. These reductions are expected to yield annualized savings of between $7-8 million per year without impacting the Company’s ability to meet previously stated financial goals.

“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,” said Mr. Gontmakher.  “Particularly in uncertain times, maximizing the amount of revenue growth that translates directly to increased EBITDA and cash flow is a high priority.” 

Focus on Core Assets and Reduced Capital Requirements

Along with cost reductions, 4Front’s path to achieve positive cash flow is predicated on its prioritization of driving performance in core assets.

“4Front’s core assets are in adult-use markets and afford us the opportunity to meaningfully expand our cultivation and manufacturing capabilities, most notably in Illinois, Massachusetts and California in the future,” Mr. Gontmakher said. “This focus allows us to allocate capital to core businesses that can achieve significant, near-term cash flow.”

To that end, 4Front announced:

  • Delaying projects that require significant capital expenditures with uncertain near-term benefits. Most notably, the Company is delaying the launch of its manufacturing facility in Commerce, CA as a result of the challenging conditions that impacted the California adult-use market roll out prior to the COVID-19 pandemic.
  • The divestiture of its subsidiary, PHX Interactive LLC, which managed the Mission North Mountain dispensary in Phoenix, Arizona (non-core asset) for $6 million in cash.

Mr. Rosen added, “With the cost of capital remaining high, 4Front is prioritizing the demonstration of battle-tested operating capabilities and near-term cash flow generation, recognizing that a large part of the blue-sky growth opportunity in cannabis is the ability to scale consistent performance across geographies.  To support growth and focus, 4Front has now divested interest in two non-core geographies and is considering divesting additional non-core assets.”

The net effect of non-core asset sales and cost cutting measures is a significant reduction in new capital needed to achieve the Company’s goal of positive cash flow in the second half of 2020. The Company estimates it needs an incremental $5 million to reach this goal.  “We are in the process of finalizing a private placement to raise at least $5 million consisting mostly of insiders and existing shareholders,” said Mr. Rosen.

Recent Business Performance

As of March 30, 2020, the Company’s retail stores in the following states remain open and operating with “Essential Service” designations. New services including online ordering and curbside pickup have also been implemented.

Mr. Gontmakher continued, “The safety of our customers and employees is our highest priority. We are monitoring the COVID-19 situation in the U.S. and have proactively taken extra precautions to minimize disruption while adhering to public health guidance. As an Essential Service, we intend to continue to serve our patrons responsibly through this crisis. Despite the uncertainty surrounding COVID-19, we are pleased to see strong sales across our entire platform and expect 4Front to come out a stronger company on the other side.”

Strong quarter-over-quarter performance is being driven by an 80%+ increase in pro forma systemwide sales at 4Front’s Mission retail locations, as well as continued performance improvements of 4Front’s cultivation and production facilities in Illinois and Massachusetts following the transition of the management of these assets to the team led by Mr. Gontmakher.

Full Year 2019 Earnings Date and 2020 Financial Guidance

The Company plans to announce its fourth quarter 2019 and full-year 2019 financial results, as well as a pre-release of its first quarter 2020 financials, on or before April 30, 2020.

With strong sales momentum and focus on operating efficiencies the Company is on track to meet its previously stated 2020 guidance of systemwide pro forma revenue of $140 million – $180 million in 2020, reported revenue of $100 million – $140 million, and Adjusted EBITDA in 2020 of $10 million – $15 million. However, given the ongoing uncertainty in the market and the economy due to Covid-19, the Company will suspend further formal guidance at this time. The Company expects to provide reinstated guidance for both 2020 and 2021 when it has more visibility into the operating environment.

Non-IFRS Financial Measures

4Front uses Systemwide Pro Forma Revenue, which is not a measurement included in the International Financial Reporting Standards (IFRS), to capture total revenue plus revenue from entities with which the Company has a management contract, or effectively similar relationship (net of any management fee or effectively similar revenue), but does not consolidate the financial results of per IFRS 10 – Consolidated Financial Statements, plus revenue from pending and closed acquisitions as if such acquisitions had occurred on January 1, 2019. 4Front considers this measure to be an appropriate indicator of the growth and scope of the business.

About 4Front Ventures Corp.
4Front is a cannabis company designed for long-term success and built upon battle-tested operating capabilities at scale, experienced and committed leadership, and a strategic asset base. From plant genetics to the cannabis retail experience, 4Front’s team applies expertise across the value chain. 4Front has invested heavily to assemble a comprehensive collection of management skills and hands-on operating expertise to capitalize on the unique growth opportunity being afforded by the increased legalization of cannabis. For more information, visit 4Front’s website.

Investor Contact
Andrew Thut, Chief Investment Officer
IR@4frontventures.com
602-633-3067

Phil Carlson / Elizabeth Barker
pcarlson@kcsa.com / ebarker@kcsa.com
212-896-1233 / 212-896-1203

Media Contact
Anne Donohoe / Nick Opich
KCSA Strategic Communications
adonohoe@kcsa.com / nopich@kcsa.com
212-896-1265 / 212-896-1206

This news release was prepared by management of 4Front Ventures, which takes full responsibility for its contents. The Canadian Securities Exchange (“CSE”) has not reviewed and does not accept responsibility for the adequacy of this news release. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. 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 U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Forward Looking Statements

Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in 4Front Ventures’ periodic filings with securities regulators. When used in this news release, words such as “will, could, plan, estimate, expect, intend, may, potential, believe, should,” and similar expressions, are forward-looking statements.

Forward-looking statements may include, without limitation, statements related to future developments and the business and operations of 4Front Ventures, developments with respect to legislative developments in the United States, expectations regarding the COVID-19 pandemic, future revenue or Adjusted EBITDA expectations, and other statements regarding future developments of the business.

Although 4Front Ventures has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on obtaining regulatory approvals; investing in target companies or projects which have limited or no operating history and are engaged in activities currently considered illegal under U.S. federal laws; change in laws; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth and state adoption due to inconsistent public opinion and perception of the medical-use and adult-use marijuana industry and; regulatory or political change.

There can be no assurance that such information will prove to be accurate or that management’s expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events.

Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. 4Front Ventures disclaims any intention or obligation to update or revise such information, except as required by applicable law, and 4Front Ventures does not assume any liability for disclosure relating to any other company mentioned herein.

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Wednesday, March 25, 2020

Warning Signs of Drainage and Sewer Problems

Are you experiencing unusual problems with your fixtures? Your home might be telling you something. Watch out for these warning signs so you can call a professional to fix them right away:

Sewer odor
Without getting too far into building science, a general plumbing rule of thumb is that every drain needs a trap, and every trap needs a vent. All those traps and drains are designed to prevent sewer gas from entering your home. The vents in your home should channel sewer odor up to the roof, while drain traps create a “water plug” that acts as a barrier stopping sewer odors from coming through the sink drain. If you smell sewer gas in your home, that means either a trap has run dry or a vent line has cracked. A dry trap can be fixed as easily as refilling it with water, or you may need to examine it for signs of the leak. Tracking down a cracked sewer vent can be much more difficult, as they are often enclosed in a wall, and will require a bit of drywall surgery in order to find and repair. Source: FamilyHandyman

Slow drain
When one fixture is draining slowly, it probably means it’s clogged. Check to see if your drains need to be cleaned manually and use a plunger or drain cleaner to try to unclog them. When all of your fixtures are draining slowly, you may very well have a major plumbing problem on your hands. There might be an issue with your plumbing vent or perhaps tree roots are clogging the sewer line. As time goes on, slow draining fixtures can lead to water backing up. When it’s backing up in every fixture, it’s well past time to call a plumber. Source: TheArchitectsDiary

Gurgling sound
Unless you’ve just flushed it your toilet should be pretty quiet, so if you start to hear a gurgling noise, the fixture may be trying to tell you that there’s an underlying issue. Potential causes of a gurgling toilet include a blocked vent stack or even a blocked sewer line. Source: BobVila

Repairing sewage and drainage problems requires the tools and knowledge of an expert. Call us to get a free estimate!

 

Contact:
Kerrisdale Roofing & Drains
8296 Ross St, Vancouver, BC V5X 4C6
(604) 360-2114



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Friday, March 20, 2020

Mission Dispensaries provides update on new procedures in response to Covid-19

MISSION DISPENSARY UPDATES: The safety of our community is our top priority. We are implementing a few new procedures and asking for your partnership to protect our patients and staff alike. Please visit our retail website for detailed information and instructions for our various locations.

Online Ordering Required at these locations: Georgetown Medical Cannabis Dispensary, Worcester Medical Cannabis Dispensary, Allentown Medical Cannabis Dispensary, Catonsville Medical Cannabis Dispensary, Hampden Medical Cannabis Dispensary, and North Mountain Medical Cannabis Dispensary.

Curbside Pick-Up: Catonsville Medical Cannabis Dispensary, Glenmont Medical Cannabis Dispensary, and Ann Arbor/Om of Medicine Cannabis Provisioning Center

Limited Access to the Sales Floor: South Shore Cannabis Dispensary.

The post Mission Dispensaries provides update on new procedures in response to Covid-19 appeared first on 4Front.



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Tuesday, March 17, 2020

Protecting Your Home from Covid-19

Now that the whole world is in heightened alert due to the coronavirus, our homes should be a sanctuary where we won’t have to worry about getting infected. Keep your place safe by using the following tips:

Use bleach
According to Robyn Gershon, MHS, DrPH, a clinical professor of epidemiology at New York University’s School of Global Public Health, herbal-based cleaners haven’t been shown effective against neutralizing COVID-19 on common surfaces. If you’re heading out to buy cleaners and other disinfectants to keep your spaces germ-free, you may be best off buying a gallon of household-friendly bleach, Gershon says, as you’ll need to frequently disinfect highly-trafficked areas of the house during flu season (think: toilet seats, door handles, railings, and sink faucet handles).

Note that many common disinfectant products, including wipes and sprays, need to stay wet on a dirty surface for a certain amount of time to actually be effective, says Carolyn Forte, Director of the Good Housekeeping Institute Cleaning Lab. “If you’re using it for a matter of seconds, it’s not going to work. You’ll want to use another cleaner in this case.” Lysol wipes, for example, can sanitize a surface in as little as 10 seconds, according to the product’s instructions; but in order to fully disinfect a surface, however, Forte says the manufacturer requires you to “leave the surface visibly wet” for at least 4 minutes. Depending on how many people live in your home, and whether or not they’re sick in the first place, you may need to change tactics from simply sanitizing something to fully disinfecting with bleach or other strong cleaning agents. Source: GoodHousekeeping

If bleach is unavailable, go for hydrogen peroxide
Hydrogen peroxide isn’t only effective for whitening teeth — in fact, the CDC says that 3% hydrogen peroxide was able to inactivate rhinovirus within eight minutes. When you pour the substance directly on surfaces like your sink, countertops or toilets, you’ll need to let it soak for around 10-15 minutes. This will give it time to completely do its job. After you let it sit, scrub the area and then rinse with water.

It’s also safe to clean your toothbrush with hydrogen peroxide since the bristles can harbor bacteria. Source: Cnet

Don’t forget to put on to some gloves
The CDC recommends using latex gloves to while you disinfect household surfaces.

If you’re using reusable gloves, don’t use them for other purposes, and clean your hands immediately after the gloves are removed. Peel the gloves away from your body, pulling them inside out, and try not to let the outside of the glove touch your skin. Source: BusinessInsider

 

Contact:
Kerrisdale Roofing & Drains
8296 Ross St, Vancouver, BC V5X 4C6
(604) 360-2114



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Thursday, March 12, 2020

Spring Cleaning Tips for Your Home’s Exterior

When you do your annual spring cleaning this year, don’t forget to give your home’s exterior some love, too! Take note of the following areas and include these tips in your checklist of things to do:

Roof
Spring is also a good time to examine your roof to see if winter snow and ice have caused any problems that need attention.

Look for torn or missing shingles that might need replacement or repair.
Pay particular attention to flashing around chimneys, plumbing vents, and other openings that are prone to leaks. Seal any gaps with roofing cement.
Cover exposed nail heads with a dab roofing cement.
Remove leaves, sticks, or other debris that has built up in valleys and against chimneys, porches, or dormers. Source: TodaysHomeowner

Deck
Everybody likes fungus on the deck! Oh wait, no one likes fungus on the deck — or mildew stains, dirt or weather-beaten patches.

It’s tempting to just bleach the whole thing will-nilly, but don’t give in. Pressure wash the deck and — this is easy enough — use an actual deck-cleaner solution.

When you’re done with all the washing, it’s time to restain. There are finishes and colors a-plenty, so you should be able to find whatever it is your heart desires. Look for something with a protective finish to repel water (and UV rays). Source: Home.HowStuffWorks

Other commonly ignored places
Windows: Washing windows and screens will give you a sparkling view of spring even if it’s still a bit too cold to be outside enjoying it as much as you want.

Gutters: Cleaning out rain gutters is a fall chore for many homeowners, but checking them again in the spring will ensure that no debris has become clogged in them during winter storms.

Siding: Pressure wash the siding of your home to remove grime. Be sure to start at the highest points of your home to avoid washing dirt down onto clean areas.

Garage: Cleaning out the garage will give you more space for summer equipment such as bikes, outdoor games, and gardening equipment. This may be a good time to hold a yard sale as well. Source: Cleaning.LoveToKnow

Don’t have the right tools to clean the areas we mentioned? We’ve got you covered. Call us today so we can give you a free estimate!

 

Contact:
Kerrisdale Roofing & Drains
8296 Ross St, Vancouver, BC V5X 4C6
(604) 360-2114



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Thursday, March 5, 2020

Advantages and Disadvantages of Aluminum Decking

One of the latest trends in home design includes extending the living spaces outdoor. If you’re looking to start spending more time outside once the weather becomes less chilly, but you still don’t have a deck installed at home, why not make it your spring project? As you decide which material to choose for your deck, consider the following pros and cons of using aluminum:

ADVANTAGES

Stronger but lighter
Aluminum decking is three to four times lighter than the most popular wood decking species, but also two to three times stronger. It can be cut with the same saws used to cut wood. Many aluminum decks have interlocking edges, making them watertight. Self draining channels can dispose of rain water easily, and keep lower deck surfaces dry. Source: HGTV

Weather resistant
Aluminum is nonabsorbent and can’t be damaged by rain or snow. Since this material is impervious to moisture, it won’t warp, shrink, twist, crack, or splinter as wood does, nor is it attractive to mold or rot as many of the composite materials tend to be. What’s more, it won’t suffer sun damage like plastics. PS: It’s also rustproof and saltwater resistant – perfect for your beach cottage deck!

Fire resistant
When exposed to sparks or flame (as when you host a summer barbecue out on your deck), aluminum will not burn, char, or melt. Source: Networx

DISADVANTAGES

Appearance
Aluminum decking is often made to look like wood. However, even the best attempt at creating a wood grain appearance can never match up to the real thing. This may be a problem for some, while others will not care. It comes down to personal preference, but you should take a look at an example of aluminum decking before purchasing it yourself. The best-case scenario is to see an entire deck made of the substance as opposed to just a small section in a store. Source: EHow

Price
Aluminum decking is expensive. According to Black and Decker’s “The Complete Guide to Building Decks,” aluminum decks are typically more expensive than other alternatives, including wood, PVC vinyl and composite materials. The price of the aluminum decking depends on the size of the deck, professional installation charges, delivery charges (if any) and other hired services. Source: Hunker

If you want to skip the part where you have to stress out about building your own deck and just jump straight to relaxing on it once it’s done, give us a call and we’ll have it built for you in no time!

 

Contact:
Kerrisdale Roofing & Drains
8296 Ross St, Vancouver, BC V5X 4C6
(604) 360-2114



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