The California-based cannabis company, formed by a 2021 merger between Terra Tech Corp. and Umbrla Inc., published its preliminary and unaudited financial results for 2022 ending Dec. 31, 2022.
Sales growth appears to be one of the fewer upbeat aspects of the company’s journey lately, after a turbulent year of lawsuits, C-suite shuffles, and shareholder angst fueled by market woes.
In August, the firm tapped new CEO, Sabas Carrillo, in hopes that the CFO for Cookies Creative Consulting & Promotions Inc. – an arm of lifestyle brand Cookies – and longtime cannabis consultant could help steer the company in the right direction.
The company also tapped Tracy McCourt, who most recently served as chief revenue officer at MedMen, as CRO and Jim Miller, former CFO of Operators Only, to be chief operating officer.
“Both Unrivaled and Adnant have been focused on the company’s business, and the results we are sharing today are the product of dogged determination and relentless hard work,” Carrillo said in a statement on Tuesday.
There are attractive incentives for Carrillo to have met his business objectives laid out in his Aug. 12 engagement letter, when he took on the CEO mantle on an interim basis. The newly minted permanent CEO stands to receive a bonus of $2 million based on the Aug. 12 closing stock price of $0.06 per share from his 33.3 million shares.
Per the letter, Carrillo had until Dec. 31, 2022, to achieve a variety of goals including hiring new executives, raise funding, renegotiate debts, negotiate and settle litigation, and facilitate a favorable sale or merger. Carrillo is entitled to receive between $100,000 to $200,000 for each accomplished goal.
The company more recently departed its “unprofitable” Oregon ventures Psychonaut Oregon LLC and LTRMN Inc., which was sold back to its original owners on Dec. 28.
Unrivaled also exited “underperforming” retail spots in Los Angeles, San Leandro, and Sacramento and laid off more than 40% of its payroll, mainly through site closures and reduction of corporate headcount.
Unrivaled grew 10% over the year to $52.5 million, led by a 65% increase in revenue from cannabis retail stores. Plant sales grew to $40.5 million, up from $24.5 million in the prior year.
“While substantial progress has been made, risk factors previously disclosed in public disclosures remain a threat to the company including ongoing litigation with People’s California, LLC, substantial debt, and market conditions, any of which can derail our progress,” Carrillo said. “We’ve come a long way in turning the company around and are working with our creditors to restructure company debt to better position us for future growth.”
The company said in its filing that retail revenue increases were partially offset by lower cannabis cultivation and distribution sales negatively impacted by a restructuring of the company’s cannabis brands, which has meant fewer active products as well as a downsizing of its internal sales force.
Unrivaled reduced its total liabilities by 41% to $71.1 million at December 31, 2022, down from $120.7 million at the end of 2021.
The company attributed the progress to “concerted efforts to renegotiate or settle debt, pay down creditors, and improve working capital.” Excluding ASC 842 lease liabilities, total liabilities at the end of the year was $58.8 million.
The quarterly revenue story is a bit more dim, though the picture is improving.
Fourth-quarter revenue from the Unrivaled’s four continuing retail stores was $8.5 million versus $13.3 million from six stores in the same period the year before.
The company entered a management services agreement with Brick City Productions to reopen a previously shuttered Blüm store in San Leandro.
“Since coming on board in August of 2022, our new management team has been focused on optimizing cashflow by eliminating noncore assets, streamlining ongoing operations, and improving the company’s balance sheet with an emphasis on improving key vendor relationships and reducing short and long-term debt,” Chan said in a statement.
“The revitalized Unrivaled team has operated with discipline and our preliminary fourth quarter financial results reflect their hard work. As we continue to work to strengthen our working capital, we also look forward to working to expand our California cannabis retail footprint.”