California-based cannabis operator Gold Flora Corp. (OTC:GRAM) is on the brink of receivership (a legal process in which a court appoints an independent party to manage a company's assets and operations, often as a last-ditch effort to recover debts or restructure the business) as it struggles with significant financial challenges. As MJBiz Daily reported, the financial recovery firm Global Assets Liens & Foreclosure has filed an ex parte application for receivership in Santa Barbara Superior Court, citing more than $236,725 in unpaid invoices. The hearing is scheduled for November 27.
Receivership Specialist Tapped
Global Assets has requested Kevin Singer of Receivership Specialists, known for handling cannabis industry cases involving Herbl, High Times and StateHouse Holdings (OTCPK: STHZF), to serve as receiver for Gold Flora. Currently operating under a limited receivership in Delaware, Gold Flora has reported losses exceeding $37 million.
Liquidity Crisis And Cost-Cutting Measures
Recent filings reveal that Gold Flora is grappling with severe liquidity issues. A proxy statement highlighted a 1-for-50 reverse stock split and plans for substantial share issuance as part of its survival strategy. The company is also implementing cost-cutting measures, including a 10% payroll reduction, according to chief financial officer Marshall Minor during a November 14 earnings call.
Expansion Amid Financial Struggles
Despite its financial instability, Gold Flora CEO Laurie Holcomb announced plans to expand the company's portfolio, emphasizing the launch of its new Gramlin cannabis products. This move comes as the company works to stabilize operations after its 2023 merger with TPCO Holdings, also known as The Parent Co.
The merger, an all-stock deal, resulted in the formation of a new parent company, operating as Gold Flora Corp. It provided access to a $5 million line of credit from The Parent Co. at a 10% annual interest rate secured by Gold Flora's assets. The deal was projected to streamline operations and deliver annual savings of $20 million to $25 million, though the company's current financial state suggests those benefits have yet to materialize.
The Road Ahead
Gold Flora's financial troubles highlight ongoing challenges for cannabis operators navigating a competitive and highly regulated industry. The upcoming hearing could determine the company's future as it attempts to balance cost-cutting with expansion plans.
Gold Flora shares traded up 4.91% at $0.043 per share at the time of this publication.
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