PRESS RELEASE

  •  This fall 2019 Systemwide Pro Forma Sales of $17.5m, a rise of 525% over This fall 2018.
  • 2019 Full Year Systemwide Pro Forma Sales for 2019 of $63.5m, a rise of 786% over full 12 months 2018.
  •  Q1 2020 Systemwide Pro Forma Sales of $23.8m, a rise of 36% over This fall 2019.
  • Robust client demand continues throughout all working markets regardless of COVID-19.
  •  ​Company reaches a conditional decision, topic to last fee approval, with the Massachusetts Cannabis Control Commission with respect to legacy regulatory points.  The Company expects the settlement, if accredited, will clear the trail for leisure licensing of its Massachusetts areas.
  • Funded enlargement plans underway in each Massachusetts and Illinois manufacturing amenities anticipated to be accomplished by This fall 2020.
  • Company stays on tempo to be money movement optimistic in 2H 2020 and poised to point out vital working leverage in 2021.
  •  Company is in lively discussions to additional enhance liquidity and strengthen its steadiness sheet by way of a sale and leaseback of its affiliated amenities in Washington state.

PHOENIX, Ariz., June 15, 2020 – 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) (“4Front” or the “Company”) right this moment introduced its audited monetary outcomes for the fourth quarter and Fiscal Year 2019 and preliminary outcomes for the First Quarter of 2020.

The Company’s 2019 monetary statements consolidate outcomes from 4Front Holdings LLC (“4Front Holdings”) and Cannex Capital Holdings, Inc. (“Cannex”), which accomplished a merger on July 31, 2019. Cannex operations are included from July 31, 2019, by way of December 31, 2019.

Fourth Quarter and Fiscal 2019 Financial Results Highlights

  • Total Systemwide Pro Forma Sales, a non-IFRS measure, for the fourth quarter 2019 elevated 525% year-over-year and 4% quarter-over-quarter to $17.5m. Total Systemwide Pro Forma Sales for 2019 elevated 786% year-over-year to $63.5m.
  • IFRS Sales for fourth quarter 2019 elevated 361% year-over-year and 6% quarter-over-quarter to $12.9m.
  • Adjusted EBITDA, a non-IFRS measure, for the fourth quarter was a lack of $5.4m. Adjusted EBITDA for 2019 was a lack of $20.9m.
  • The Company ended the fourth quarter of 2019 with $8.1m of money and $87.3m in long-term and convertible debt.
  • Fourth quarter outcomes embrace a non-cash impairment cost of $146.3m associated to timing of the closing of the Cannex transaction. Higher business inventory costs on the date of the merger in comparison with inventory costs at December 31, 2019 was the first driver within the impairment of goodwill. The impairment will not be reflective of any change to the Company’s expectations for elevated income and improved profitability.

First Quarter 2020 Preliminary Financial Results Highlights

  • Preliminary Total Systemwide Pro Forma Sales for the primary quarter 2020 elevated 36% quarter-over quarter to $23.8m.
  • Preliminary IFRS Sales for the primary quarter of 2020 elevated 37% quarter-over-quarter to $17.6m.
  • Gross revenue, much less the impression of changes for organic property, for the primary quarter was $9.7m.
  • Adjusted EBITDA for the primary quarter was a lack of $3.8m.

Business Update

Robust client demand continues throughout all working markets regardless of COVID-19.  All states the place the Company operates has deemed hashish operations as “essential businesses” throughout the pandemic.

Company reaches a conditional decision, topic to last fee approval, with the Massachusetts Cannabis Control Commission with respect to legacy regulatory points.  The Company expects the settlement, if accredited, will clear the trail for leisure licensing of its Massachusetts areas. ​

Funded enlargement plans underway in each Massachusetts and Illinois manufacturing amenities anticipated to be accomplished by This fall 2020.  These upgrades signify Phase 1 of the Company’s enlargement plans in two of its core markets that are anticipated to double the output of its Georgetown, Massachusetts facility and greater than triple present output in Illinois.

Company stays on tempo to be money movement optimistic in 2H 2020 and is poised to point out vital working leverage in 2021.  Having lowered company overhead expense by over 40%, the Company anticipates producing optimistic money movement commensurate with last leisure licensing in Massachusetts and producing optimistic adjusted EBITDA in 2020.

Liquidity and Sale Leaseback Update

As of May 31, 2020, 4Front’s steadiness sheet had money and equivalents of $11.5m with complete debt of $80.1m (excluding in-the-money convertible debt of $5.8m).

The Company owns and controls extremely engaging actual property in Washington state consisting of 176,000 sq. ft of state-of-the-art industrial area constructed for cultivation, manufacturing and distribution. ​ The property are encumbered by senior secured debt related to Gotham Green Partners. ​

A sale and leaseback of those property would doubtless allow the Company to take away the senior secured debt from its capitalization desk, creating the good thing about eradicating vital debt from the steadiness sheet whereas giving the Company flexibility to extra freely pursue non or minimally dilutive venture financing choices. ​

The Company is in lively discussions with a number of companions on a transaction. ​

Management Commentary

Leo Gontmakher, CEO of 4Front, mentioned, “2019 was a transformative year for our company. With the acquisition of Cannex in July and its subsequent integration into 4Front during the second half of the year, 4Front became a leader in the mass-production of low-cost, high quality, branded cannabis products. Entering 2020, we have been laser-focused on leaning out and replicating our low-cost cultivation and production model in targeted states. The implementation of this model at our facilities in Georgetown and Worcester, Massachusetts, and in Elk Grove Village, Illinois, is expected to enable us to increase production of cannabis products to meet the new adult use demand expected in those two states.”

Mr Gontmakher added: “The work our team has done over the past six months to focus our business model, streamline our cost structure and fortify our balance sheet has set the stage for us to accelerate growth across our core markets of Washington, Illinois, Massachusetts, Michigan and California. Reducing debt, in particular the elimination of the senior secured convertible debt, will greatly improve our financial flexibility and will allow us to consider a wider range of financing funding options as we look to expand deeper into those core markets. 4Front has never been stronger than it is today, supported by a strengthened balance sheet, proven expertise and streamlined operations.  We are extremely confident in how the company is positioned as we enter this new season in our history.”

(Please see Note Regarding Non-IFRS Measures, Reconciliation, and Discussion beneath.) (*Please see the Financial Statement part beneath, and the Company’s 2019 Audited Consolidated Financial Statements and Management Discussion and Analysis (“MD&A”), obtainable below the Company’s SEDAR profile, for extra data.)

Additional Details

At December 31, 2019, and the date of the MD&A, there have been the equal of 531,521,620 Class A Subordinate Voting Shares excellent when calculated as if all share lessons have been transformed to Subordinate Voting Shares. For additional particulars concerning 4Front’s share construction, please see its profile at www.thecse.com.

Conference Call

The Company will host a convention name and webcast right this moment, Monday, June 15, 2020, at 9:00 a.m. EDT to assessment its operational and monetary outcomes and present an replace on present enterprise traits.

To be a part of the decision, dial 1-877-407-0792 toll free from the United States or Canada or 1-201-689-8263 if dialing from exterior these international locations. The webcast, which can embrace a slide deck, will be accessed at this link.

The name will likely be obtainable for replay till Monday, June 22, 2020. To entry the phone replay, dial 1-844-512-2921 toll free from the United States and Canada, or 1-412-317-6671 if dialing from exterior these international locations, and use this replay pin quantity: 13704727.

Financial Statements

The audited consolidated monetary statements for the twelve months ended December 31, 2019, have been ready in accordance with International Financial Reporting Standards.

Note Regarding Non-IFRS Measures, Reconciliation, and Discussion

In this press launch, 4Front refers to sure non-IFRS monetary measures similar to Systemwide Pro Forma Revenue and Adjusted EBITDA. These measures don’t have any standardized which means prescribed by IFRS and will not be similar to comparable measures introduced by different issuers. 4Front defines Systemwide Pro Forma Revenue as complete income plus income from entities with which the Company has a administration contract, or successfully comparable relationship (internet of any administration charge or successfully comparable income) however doesn’t consolidate the monetary outcomes of per IFRS 10 – Consolidated Financial Statements. 4Front considers this measure to be an acceptable indicator of the expansion and scope of the enterprise.

Adjusted EBITDA is outlined by the Company as earnings earlier than curiosity, taxes, depreciation and amortization much less share-based compensation expense and one-time costs associated to acquisition and financing associated prices, excluding honest worth changes for organic property. 4Front considers these measures to be an necessary indicator of the monetary energy and efficiency of our enterprise. The following tables present a reconciliation of every of the non-IFRS measures to its closest IFRS measure.To be added to the e-mail distribution listing, please e mail [email protected] with “4Front” within the topic.

About 4Front Ventures Corp.

4Front (CSE: FFNT) (OTCQX: FFNTF) is a nationwide multi-state hashish operator and retailer, with a market benefit in mass-produced, low-cost high quality branded hashish merchandise. 4Front manufactures and distributes a portfolio of over 25 hashish manufacturers together with Marmas, Crystal Clear, Funky Monkey, Pebbles, and the Pure Ratios wellness assortment, distributed by way of shops and their chain of strategically positioned Mission branded dispensaries.

Headquartered in Phoenix, Arizona, 4Front has operations in Illinois, Massachusetts, California, Michigan and Washington state. From plant genetics to the hashish retail expertise, 4Front’s crew applies experience throughout the complete hashish worth chain. For extra data, go to 4Front’s website.

4Front Investor Contacts

Andrew Thut, Chief Investment Officer

[email protected]

602-633-3067

Phil Carlson / Elizabeth Barker

[email protected]

212-896-1233 / 212-896-1203

4Front Media Contacts

Anne Donohoe / Nick Opich

KCSA Strategic Communications

[email protected] / [email protected]

212-896-1265 / 212-896-1206

This information launch was ready by administration of 4Front Ventures, which takes full duty for its contents. The Canadian Securities Exchange (“CSE”) has not reviewed and doesn’t settle for duty for the adequacy of this information launch. Neither the CSE nor its Regulation Services Provider (as that time period is outlined within the insurance policies of the CSE) accepts duty for the adequacy or accuracy of this launch.

This information launch doesn’t represent a suggestion to promote or a solicitation of a suggestion to promote any of the securities within the United States. The securities haven’t been and won’t be registered below the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities legal guidelines and will not be supplied or bought throughout the United States or to U.S. Persons until registered below the U.S. Securities Act and relevant state securities legal guidelines or an exemption from such registration is accessible.

Forward Looking Statements

Statements on this information launch which can be forward-looking statements are topic to numerous dangers and uncertainties in regards to the particular components disclosed right here and elsewhere in 4Front Ventures’ periodic filings with securities regulators. When used on this information launch, phrases similar to “will, could, plan, estimate, expect, intend, may, potential, believe, should,” and comparable expressions, are forward-looking statements.

Forward-looking statements could embrace, with out limitation, statements associated to future developments and the enterprise and operations of 4Front Ventures, developments with respect to legislative developments within the United States, expectations concerning the COVID-19 pandemic, future income or Adjusted EBITDA expectations, statements concerning when or if any contemplated or in-progress transactions will shut or if/when required regulatory approvals are attained, and different statements concerning future developments of the enterprise. The closing of the transactions described on this information launch, together with the divesture of Pennsylvania and Maryland property and the sale of convertible debt, is topic to customary circumstances and there will be no assure that such transactions will shut.

Although 4Front Ventures has tried to determine necessary components that would trigger precise outcomes, efficiency or achievements to vary materially from these contained within the forward-looking statements, there will be different components that trigger outcomes, efficiency or achievements to not be as anticipated, estimated or supposed, together with, however not restricted to: dependence on acquiring regulatory approvals; investing in goal firms or tasks which have restricted or no working historical past and are engaged in actions presently thought-about unlawful below U.S. federal legal guidelines; change in legal guidelines; restricted working historical past; reliance on administration; necessities for added financing; competitors; hindering market progress and state adoption because of inconsistent public opinion and notion of the medical-use and adult-use marijuana business and; regulatory or political change.

There will be no assurance that such data will show to be correct or that administration’s expectations or estimates of future developments, circumstances or outcomes will materialize. As a results of these dangers and uncertainties, the outcomes or occasions predicted in these forward-looking statements could differ materially from precise outcomes or occasions.

Accordingly, readers shouldn’t place undue reliance on forward-looking statements. The forward-looking statements on this information launch are made as of the date of this launch. 4Front Ventures disclaims any intention or obligation to replace or revise such data, besides as required by relevant regulation, and 4Front Ventures doesn’t assume any legal responsibility for disclosure referring to another firm talked about herein.

 



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