4Front Ventures, (CSE: FFNTF), (OTCQB : FFNTF) announced Wednesday that it cannot meet the April 30 deadline for filing its annual financial reports because it is unable to pay its auditors.
Phoenix-based Company also filed for a Management Cease Trade Order that would restrict the trading of its shares by its leaders while they try to solve their money problems.
According to a press release, the delay is due to the fact that the company “is working to resolve the issue” and will be ready to submit the reports once it has completed securing extra financing, restructuring their liabilities, and continued discussions with one company’s lessee. Management said that they expect to submit within 60-days of restarting the audit.
4Front has been experiencing a difficult period, as it lost $6.8 million during the third quarter and saw its revenues decline. Revenue for the third quarter dropped from $15.2 to $15.2, compared with $20.1 million in the same period last year.
This revenue drop was attributed to “softness within our retail channels due to increased competitiveness” in Illinois as well as Massachusetts.
Andrew Thut, the CEO of Thut, tried to be positive by saying that they were making progress in Illinois and Massachusetts, increasing their wholesale business, and seeing improved results in Washington.
Thut, at the time, said: “Despite uncertainty surrounding federal cannabis legislation, we remain optimistic. This is especially true given the signs that the incoming administration may be unexpectedly supportive.” We’re confident going into Q4 and ready to get back to sustainable growth, and positive cash flow from operations.
4Front said that at the same time, it had retained Canaccord Genuity for help in a reorganization of its internal operations and finances. It also obtained a loan of $850,000 to fund ongoing operations.
This company requested relief from Canadian National Policy 12203 which prohibits management trading securities of the company until they file their financials. Ontario Securities Commission still hasn’t made a decision on this request.
The commission could impose an order that affects all securities of the company if it rejects your request.
4Front has promised biweekly updates on the status of the company’s annual filings. They have also confirmed that the insiders cannot trade the stock before the annual filings.
Despite its financial crisis, the company is pushing forward with growth initiatives. It continued to build a huge 250,000-square foot cultivation facility in Matteson Illinois during the third quarter. The company plans to increase its growing area from 24,000 square feet to 34.800. The Massachusetts wholesale division showed promise, with revenues increasing by 56% to $2 million in the third quarter.
4Front, as of September 20, 2024, had assets worth $278 millions dollars, but only $1.2 million cash. This was compared to liabilities totaling $326.5million dollars, including $69million in debt.
According to the company, there has been no “material business development” since its December quarter report.