The Flowr Corporation (TSXV: FLWR) (“Flowr” or “the Company”), a
Canadian Licensed Producer of premium cannabis products, today
announced its results for the third quarter and nine months ended
September 30, 2018. The Company’s interim financial
statements and management’s discussion and analysis for the periods
are available on SEDAR at www.sedar.com. All results are
reported in Canadian Dollars.
This is Flowr’s first report of financial
results since the completion of its going-public transaction on
September 21, 2018. Flowr’s results for these periods do not
include any sales of cannabis products as the Company received its
sales and production license in August 2018.
In discussing the periods’ results, Flowr Co-CEO
Vinay Tolia said, “We took major steps to prepare Flowr financially
and operationally for the start of recreational sales in Canada and
to execute on our long-term business strategy. We believe that we
are well positioned to deliver on our existing supply agreements,
complete our facilities build-out and ramp-up production in 2019,
and capitalize on strategic growth opportunities globally.”
Business Highlights
- Flowr completed almost $65 million of fundraising
activities throughout 2017 and 2018, culminating in a
nearly $36 million raise as part of the reverse takeover
transaction that led to the Company’s listing on the TSX
Venture Exchange (TSXV) on September 26, 2018.
- The Company began cultivation in its Kelowna, BC facility and
harvested a total of 358,768 grams.
- Flowr received its sales license from Health Canada and
entered into supply agreements with provincial authorities from
British Columbia, Nova Scotia and Ontario. Together
these provinces account for more than half of Canada’s
population.
- In February 2018, Flowr entered into an exclusive
R&D alliance with Hawthorne Canada, a subsidiary of The Scotts
Miracle-Gro Company (NYSE: SMG), the centerpiece of which
is North America’s first R&D facility dedicated to cannabis
cultivation currently under construction adjacent to Flowr’s
Kelowna cultivation facility.
- Flowr purchased or agreed to purchase several parcels of land
adjacent to its Kelowna facilities on which it plans to build
additional cultivation facilities to expand capacity in the
future.
Selected Summary Financial
Results
In thousands of dollars
|
September 30,
2018 |
December 31,
2017 |
Change |
Cash
and Equivalents |
39,660 |
7,750 |
412% |
Inventory |
1,514 |
- |
- |
Biological Assets |
636 |
- |
- |
Property, Plant & Equipment |
19,463 |
9,279 |
110% |
Shareholder’s Equity |
65,634 |
21,502 |
205% |
|
|
|
|
In thousands of dollars except loss per share
and grams produced
|
Three Months Ended September 30 |
Nine Months Ended September 30 |
|
|
2018 |
2017 |
2018 |
2017 |
|
Grams
Produced |
221,872 |
- |
358,768 |
- |
|
Revenue |
- |
- |
- |
- |
|
Gross
profit (loss) before fair value adjustments |
259 |
(65) |
(642) |
(154) |
|
SG&A |
1,510 |
383 |
4,245 |
877 |
|
Share-based compensation |
2,378 |
- |
3,852 |
- |
|
Listing Expense |
1,803 |
- |
1,803 |
- |
|
Net
Loss |
(5,633) |
(467) |
(11,848) |
(918) |
|
Loss
per share (basic and diluted) in dollars |
(0.08) |
(0.01) |
(0.12) |
(0.01) |
|
|
|
|
|
|
|
For the three months and nine months ended
September 30, 2018, the Company’s net losses were $5,633,397 and
$11,848,186, respectively. These losses were higher than
those in the year-earlier period as Flowr commenced cultivation,
prepared for sales to the adult-use recreational and medicinal
cannabis markets, undertook a series of actions leading to the
Company’s listing on the TSXV, and built-out its staff and
executive team to support these activities. Key costs
contributing to the higher net losses were increased selling,
general and administrative expenses, share-based compensation
expense and listing expense.
Flowr produced 221,872 grams of dried cannabis
during the third quarter and 358,768 grams during the nine-months
ended September 30, 2018.
Business Update and Key Developments
Since September 30, 2018
- In early October, Flowr began fulfilling initial purchase
orders from its provincial partners in anticipation of the October
17 start of adult recreational-use sales. Flowr fulfilled
orders on-time and in-full and made several restocking
shipments after products sold out.
- Flowr formed a partnership with Ace Valley, a
new brand of cannabis from the team behind Ace Hill Beer, and
launched several SKUs in Ontario and British Columbia on October
17.
- Flowr expects to produce in excess of 550,000 grams of
cannabis during its first year of operations.
- Flowr’s 85,000 square foot Kelowna cultivation
facility is approximately 20% complete and is on
schedule for completion in the third quarter of 2019;
Flowr expects it to produce upwards of 12,000 kilos of cannabis on
an annualized basis after completion.
- The Company continues to pursue additional strategic
growth opportunities in the Canadian recreational and medical
markets as well as internationally.
Conference Call
Flowr will host a conference call for investors
on November 29 at 9:00am EST with Vinay Tolia and Tom Flow, Co-CEOs
and Alex Dann, CFO.
Toll Free Dial-in: 1-888-556-3059International
Dial-in: 1-409-983-9742Conference ID: 4079223
A replay of the call will be available until
11:59pm Eastern Time, December 12, 2018 by dialing 1-800-585-8367
or 1-404-537-3406 and entering conference code 4079223.
About
Flowr
The Flowr Corporation (TSXV: FLWR), through its
subsidiaries, holds a cannabis production and sales license granted
by Health Canada. With a head office in Markham, ON and a
production facility in Kelowna, BC, Flowr builds and operates
large-scale, GMP-designed cultivation facilities utilizing its own
patented growing systems. Flowr’s investment in research and
development along with its sense of craftsmanship and a spirit of
innovation is expected to enable it to provide premium-quality
cannabis that appeals to the adult-use recreational market and
addresses specific patient needs in the medicinal market.
For more information, visit www.flowr.ca
Follow Flowr on Twitter: @FlowrCanada; Facebook: Flowr Canada;
Instagram: @flowrcanada; and LinkedIn: The Flowr Corporation
On behalf of The Flowr Corporation:Alex
DannChief Financial Officer
Contacts
Media Jim Walsh: +1.607.275.7141,
jwalsh@flowr.caBruce Dunbar: +1.917.756.4065, bdunbar@flowr.ca
InvestorsAlex Dann, CFO: +1 416.464.4067,
adann@flowr.ca
Forward-Looking Information
This press release includes forward-looking
information within the meaning of Canadian securities laws
regarding Flowr and its business, which may include, but are not
limited to: statements with respect to the steps taken to
prepare Flowr financially and operationally for the start of
recreational sales and to execute on its long term business
strategy, Flowr being well positioned to deliver on its
existing supply agreements, complete its facilities build-out and
ramp-up production in 2019, and capitalize on its strategic growth
opportunities globally, the Hawthorne partnership and strategic
alliance, including statements with respect to R&D facility
being the first North American facility dedicated to cannabis
cultivation, purchase of, or agreements to purchase, several
parcels of land adjacent to Flowr’s Kelowna facilities, Flowr’s
plans to build additional cultivation facilities to expand capacity
in the future, projections with respect to the amount of grams to
be produced by Flowr in the fourth quarter of 2018 and annually
upon completion of the Kelowna facility, Flowr’s facilities,
including the 85,000 square foot Kelowna cultivation facility and
the timing of completion of construction thereof, Flowr expecting
to produce upwards of 12,000 kilos of cannabis on an annualized
basis after completion of the Kelowna facility, Flowr’s pursuit of
additional strategic growth opportunities in the Canadian
recreational and medical markets as well as internationally, and
Flowr’s investment in research and development along with its sense
of craftsmanship and a spirit of innovation enabling it to provide
premium-quality cannabis that appeal to the adult-use recreational
market and address specific patient needs in the medicinal
market and other factors. Often, but not always,
forward-looking information can be identified by the use of words
such as “plans”, “is expected”, “expects”, “scheduled”, “intends”,
“contemplates”, “anticipates”, “believes”, “proposes”
or variations (including negative and grammatical variations)
of such words and phrases, or state that certain actions, events or
results “may”, “could”, “would”, “might” or “will” be taken, occur
or be achieved. Such statements are based on the current
expectations of Flowr’s management and are based on assumptions and
subject to risks and uncertainties. Although Flowr’s management
believes that the assumptions underlying these statements are
reasonable, they may prove to be incorrect. The forward-looking
events and circumstances discussed in this press release may not
occur by certain specified dates or at all and could differ
materially as a result of known and unknown risk factors and
uncertainties affecting Flowr, including the steps taken by Flowr
not preparing it financially and/or operationally for the
recreational use market and/or to execute on its business strategy,
Flowr not being positioned to deliver on its existing supply
agreements, which could result in a material adverse effect on
sales and revenues, Flowr not completing the build out and/or
ramp-up of production in 2019, which could materially adversely
impact Flowr’s financial results, operations and business, Flowr
not being able to execute on growth strategies, including
international opportunities, which could adversely impact Flowr’s
growth and future prospects, the inability to construct or a delay
in constructing the R&D facility, which could adversely affect
Flowr’s competitive advantage in R&D and cultivation, the
inability to purchase additional properties, which would result in
Flowr not having additional production and sales, Flowr’s inability
to achieve the projections relating to grams of cannabis to be
produced in 2018 and/or in the future annually, which could
materially adversely affect Flowr’s sales, revenues and/or share
price, the failure of Flowr to complete the Kelowna facility on
time or at all, which would significantly impact sales and
revenues, Flowr not being able to sustain its competitive advantage
in cultivation and being unable to remain at the forefront of
industry innovation, whether as a result of failed construction of
the facilities or otherwise, Flowr not being able to meet demand or
fulfill purchase orders, which could materially impact revenues and
its relationships with purchasers, Flowr requiring additional
financing from time to time in order to continue its operations or
expand domestically or globally and such financing may not be
available when needed or on terms and conditions acceptable to the
Company, new laws or regulations adversely affecting the Company’s
business and results of operations, results of operation activities
and development of projects, project cost overruns or unanticipated
costs and expenses, the inability of Flowr’s products to
be high quality, the inability of Flowr’s products to appeal to the
adult-use recreational market and address specific patient needs in
the medicinal market, the inability of Flowr to produce and
distribute premium, high quality products, the inability to supply
products or any delay in such supply, Flowr’s securities, the
inability to generate cash flows, revenues and/or stable margins,
the inability to grow organically, risks associated with the
geographic markets in which Flowr operates and/or distributes its
products, risks associated with fluctuations in exchange rates
(including, without limitation, fluctuations in currencies), risks
associated with the use of Flowr’s products to treat certain
conditions, the cannabis industry and the regulation thereof, the
failure to comply with applicable laws, risks relating to
partnership arrangements (including the Hawthorne partnership),
possible failure to realize the anticipated benefits of partnership
arrangements (including the Hawthorne partnership), product
launches (including, without limitation, unsuccessful product
launches), the inability to launch products, the failure to obtain
regulatory approvals, economic factors, market conditions, risks
associated with the acquisition and/or launch of products, the
equity and debt markets generally, risks associated with growth and
competition (including, without limitation, with respect to Flowr’s
products), general economic and stock market conditions, risks and
uncertainties detailed from time to time in Flowr’s filings with
the Canadian Securities Administrators and many other factors
beyond the control of Flowr. Although Flowr has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking information, there may be other factors that cause
actions, events or results to differ from those anticipated,
estimated or intended. No forward-looking information can be
guaranteed. Except as required by applicable securities laws,
forward-looking information speaks only as of the date on which it
is made and Flowr undertakes no obligation to publicly update or
revise any forward-looking information, whether as a result of new
information, future events, or otherwise.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this press release.
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