Financially struggling Hightimes Holding Corp. has reportedly lost its newest CEO after less than four months on the job.
Stormy Simon, the onetime president of publicly traded Overstock.com, was tapped as the new CEO in January as the company behind stoner mag High Times said it was pivoting away from its media and entertainment roots and moving into the retail cannabis dispensary business.
The LA Cannabis News on Monday said it received a message from Simon‘s personal e-mail account saying she was no longer CEO. She did not immediately return The Post’s request for comment.
Adam Levin, the executive chairman of Hightimes and head of private equity firm Oreva Capital, did not return calls or emails by presstime.
Little more than a month after taking over as CEO, Simon announced in late February that she planned to run for Congress in Utah as a pro-pot candidate.
And while her LinkedIn profile as of Tuesday still listed her as CEO of Hightimes, her name was conspicuously absent from a recent major announcement that Hightimes Holding was buying a string of cannabis companies and continuing its push into the legal marijuana retail business.
Simon replaced Kraig Fox, a former executive of Dick Clark Productions, who suddenly resigned last Christmas Eve after just nine months on the job. The company later revealed it owed Fox $125,000 for “expenses and lease payments,” saying it wouldn’t be able to repay him until it pulled in another $5 million.
On April 28, the company said it was entering a deal with Harvest Health & Recreation to buy into a chain of dispensaries in California. Although the press release hyped it as an $80 million deal for 13 dispensaries, careful reading of the SEC document showed the deal involved only $5 million in cash upfront for only five of the dispensaries and an agreement to buy eight others at a preset price. The deal also involved a $7.5 million note, presumably held by the seller, bearing 10 percent interest and payable one year after the scheduled June 9 closing, according to the documents.
The deal also included 675,000 of newly minted “preferred stock,” which the filing said had a value of $100 million and could be converted over a five-year period into common stock.
But the company has been struggling to raise money in the public market through a crowdsourced IPO process known as a Reg A+, which allows a company to raise up to $50 million without the more stringent documentation required of a conventional initial public offering. Despite pushing the Reg A+ offering starting in 2018, the company still has not sold enough stock to trade on a public market, and has reported an “accumulated deficit” of $105.2 million.
Hightimes recently asked for a 45-day extension to file its full-year 2019 financial report. In its last filing, it said for the six months ending June 30, 2019, it posted a net loss of $11.9 million compared to a net loss of $19.7 million in the year before. Revenue in the six month period was $10.7 million, compared with $8.9 million in the six month period a year earlier.
The company also recently instituted a reverse 11 for 1 stock split. It appears to have raised less than half the $50 million it is allowed to raise under the Reg A+ regulations.
In the latest deal with Harvest Health and Recreation, the company disclosed it has paid $1 million cash so far, and will hand over another $4 million when the deal closes on June 9. If it does not close the deal by then, HHR keeps the $1 million as a bust-up fee.
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