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FLWR - Flowr News Story

C$0.235 0.0  2.2%

Last Trade - 21/06/21

Small Cap
Market Cap £50.7m
Enterprise Value £78.6m
Revenue £6.14m
Position in Universe 933rd / 2705

The Flowr Corporation Announces Fourth Quarter and Full Year 2020 Results

Wed 28th April, 2021 9:33pm
For best results when printing this announcement, please click on link below:

TORONTO, April 28, 2021 (GLOBE NEWSWIRE) -- The Flowr Corporation (TSX.V:
FLWR; OTC: FLWPF) (“Flowr” or the “Company”) herein announces its
financial and operational results for the fourth quarter and fiscal year ended
December 31, 2020.  

“2020 was very much a transitional year for the Company where we
successfully completed our ambitious capital expenditure programs in Canada
and Portugal. In the second quarter of 2020, the last grow room at the 85,000
sq. ft. facility in Kelowna, known as the K1 facility, was commissioned. In
the fourth quarter of 2020, we completed the build out of the Aljustrel and
Sintra facilities in Portugal, which included the largest known outdoor
medical cannabis harvest in the European Union. In addition, the R&D facility
in partnership with Hawthorne Canada Limited (“Hawthorne”) was
commissioned in the fourth quarter of 2020. Now that these state-of-the-art
facilities are built out and the Company has the financial capacity to ramp up
operations, we are planning to have 2021 see us reach our true potential,”
commented Steve Klein, Chair of the Company. “The first quarter has seen us
move quickly to refocus the business on our Canadian and E.U. operations. We
were able to raise additional capital in the quarter and are now well funded
to pursue our operations. We are also pleased to have been able to add Darryl
Brooker to the team as our new Chief Executive Officer commencing in May 2021
and have made additional key operational hires. Flowr is well-positioned in
2021 from a financial and leadership perspective to take advantage of our
unique assets in Canada and Portugal.”

“We continue to be very excited about Portugal and the E.U. opportunity
given the recent developments in Portugal. Medical cannabis is now being sold
in pharmacies in Portugal, which we believe is a watershed moment for cannabis
in the E.U.,” commented Pauric Duffy, Managing Director, Holigen Holdings
Limited (“Holigen”). “With the acquisition of Terrace Global Inc.
(“Terrace”) we consolidated our joint venture in Portugal and have
approximately 2,700 kilograms of high THC dry flower biomass from the
operations that we expect to sell in the second quarter. In addition, we are
moving forward with several tolling arrangements and our strategic warehousing
agreement with Tilray Inc. (“Tilray”) has given us our first revenue out
of the E.U. We continue to believe that Holigen is a very unique asset for us
in the E.U. where we now have seen another country beyond Germany open up its
medical cannabis market.”

Key financial and operating highlights in the fourth quarter and full year
* The Company generated gross revenue of approximately $2.1 million in the
fourth quarter, and recorded its first revenues from its European operations.
* Full year gross revenue was $9.4 million and represents a 15% increase
compared to the prior year.
* Net revenue in the fourth quarter of 2020 was $1.6 million, and $7.54
million on an annual basis which is a 44% increase as compared to annual 2019.
* During the quarter, the Company sold 311 kilograms of dried flower an
increase of 44% as compared to the same period in 2019. 70% of product sold in
the fourth quarter was the Company’s flagship BC Pink Kush strain. Total
annual dried flower sales were 1,405 kilograms.
* The average Flowr branded gross price per gram less excise in the fourth
quarter was $6.91 which continues to reflect the Company’s positioning in
the premium segment. The Company did not experience price erosion versus 2019.
* The Company also transitioned to an innovative glass jar packaging for its
dried flower sales, further differentiating itself in the ultra premium and
premium segment.
* Normalized cash cost per gram in Canada was $3.84 in the fourth quarter, an
increase versus the third quarter due to lower production volume.
* SG&A and transaction costs of $5.5 million in the fourth quarter of 2020
were $2.0 million higher than in the third quarter of 2020 due to professional
fees to close the Terrace acquisition and other one-time expenses. 2020 annual
SG&A expenses and transaction costs of $19.5 million were 12.6% lower than
fiscal 2019.
* The Company completed the acquisition of Terrace thereby improving the
financial position of the Company by consolidating $18.9 million in cash (net
of transaction costs), without any material increase to liabilities. In
connection with the Terrace acquisition, Flowr completed an early conversion
of $16.64 million of subordinated convertible debentures and negotiated
further covenant flexibility with its senior lending syndicate.
* During the fourth quarter of 2020, Flowr completed the first floor of the
R&D facility, in partnership with Hawthorne, a wholly-owned subsidiary of The
Scotts Miracle-Gro Company. The R&D facility is North America’s first
dedicated cannabis R&D facility focused on cultivation techniques and systems.
* Holigen, in partnership with Terrace, operated the largest known outdoor
medical cannabis operation in the E.U. yielding more than 2,700 kilograms of
medical cannabis biomass which is in the process of being sold.
Subsequent financial and operational highlights post end of the fourth
* On April 15, 2021, Flowr announced the appointment of Darryl Brooker as
Chief Executive Officer of the Company. Darryl brings an extensive track
record of building regulated CPG businesses in Canada with a hands-on approach
to management. The Company is also pleased to announce that Bonnie Donovan has
joined the Kelowna team as Vice-President, Operations. Bonnie is a senior
operations and logistics professional with leadership experience in
manufacturing operations, logistics, contract management and finance. Bonnie
was previously with such companies as AB InBev and Canopy Growth Corp.
* Flowr shipped its first commercial order into Quebec in January 2021.
* In January 2021, Flowr launched its newest strain to market, BC Black
Cherry. The first lot of BC Black Cherry contained more than 24% THC and more
than 3% terpenes.
* In January 2021, Flowr won three awards at the ADCANN Awards 2020 including
the coveted Brand of The Year award. The annual awards, which are voted on by
the public, exist to celebrate the best marketing and advertising across
Canada’s growing cannabis industry. Alongside the Brand of The Year Award,
Flowr also won Campaign of the Year.
* On March 16, 2021, the Company closed its previously announced bought deal
short form prospectus offering for gross proceeds of $15.9 million including
the partial exercise of the over-allotment option.
* On April 13, 2021, the Company announced its filing of a final short form
base shelf prospectus (the “Final Shelf Prospectus”), pursuant to which
the Company is able to offer and issue up to $100,000,000 of common shares,
preferred shares, debt securities, subscription receipts and warrants, or any
combination thereof, at prices, and on terms to be determined based on market
conditions at the time of the offering and as set out in an accompanying
prospectus supplement, during the 25-month period that the Final Shelf
Prospectus remains effective.
* On April 14, 2021, the Company announced the results of a strategic review
process designed to: (i) reduce corporate overhead and headcount; (ii) dispose
of non-core assets, including duplicative licenses in the E.U.; and (iii)
implement further cost savings strategies with a view to preserving cash and
cash equivalents.
* On April 28, 2021, the Company entered into an agreement with Rodeo Capital
Limited (a member of the Redfield Group of companies) to sell TCann Pty Ltd.
for AUD$500,000 representing the Company’s exit from the Australian medical
cannabis market and ending any further operating or capital expenditures in
Australia. Hyperion Capital Inc. advised the Company with respect to the

The following table summarizes the Company’s key financial and operational

 In thousands of CAD dollars,                         Three months ended                                              Year ended     
 (except loss per share and grams harvested)          December 31,                             December 31,                          
                                                      2020                     2019            2020                   2019           
 Grams harvested - K1*                                1,195,260                665,325         4,336,240              1,851,895      
 Grams harvested - Flowr Forest**                     —                        3,323,669       —                      3,323,669      
 Grams sold                                           311,308                  215,761         1,405,495              993,387        
 Gross revenue                                        2,066                    1,589           9,441                  8,231          
 Net revenue***                                       1,600                    51              7,513                  5,205          
 Cost of sales                                        2,904                    2,685           11,468                 7,609          
 Impairment of inventory                              842                      5,303           3,517                  5,303          
 Gross (loss) profit before fair value adjustments    (2,146     )             (7,937     )    (7,472     )           (7,707      )  
 SG&A                                                 4,614                    6,616           18,614                 21,670         
 Share-based compensation                             396                      2,767           3,020                  11,803         
 Transaction and listing costs                        917                      686             917                    686            
 Restructuring costs                                  —                        —               726                    —              
 Impairment of assets                                 83,979                   —               83,979                 —              
 Net loss                                             (99,750    )             (27,292    )    (127,855   )           (36,967     )  
 Basic and diluted loss per share                     (0.62      )             (0.12      )    (0.94      )           (0.30       )  
 Cash used in investing activities                    20,524                   (14,584    )    6,241                  (61,742     )  
 Cash from financing activities                       1,469                    16,737          28,720                 79,110         

*      Excludes trim
**    Excludes trim, includes 1,904,662g dry gram equivalent of fresh frozen
cannabis calculated based on the historical drying loss
***  Net of excise tax, sales return and concessions.

For a full discussion of Flowr’s operational and financial results for the
twelve months ended December 31, 2020, please refer to the Company’s fourth
quarter 2020 Management’s Discussion & Analysis and Consolidated Financial
Statements, which have been filed on SEDAR.


The Company will host a conference call and webcast to review these results
today at 5:30 p.m. Eastern Time.

Conference call and live webcast details are as follows:

Webcast: flowrcorp.com/investors/events-and-presentations
Online registration: http://www.directeventreg.com/registration/event/8493169
Conference call and webcast replay details are as follows:

Toll Free: 1-800-585-8367
Toll/International: 1-416-621-4642
Passcode: 8493169
Webcast: flowrcorp.com/investors

The replay of the conference call will be available through midnight on
Friday, May 7, 2021.

About The Flowr Corporation

The Flowr Corporation is a Toronto-headquartered cannabis company with
operations in Canada and Europe.  Its Canadian operating campus, located in
Kelowna, BC, includes a purpose-built, GMP-designed indoor cultivation
facility; an outdoor and greenhouse cultivation site; and a state-of-the-art
R&D facility that is awaiting licensing from Health Canada.  From this
campus, Flowr produces recreational and medicinal products.  Internationally,
Flowr intends to service the global medical cannabis market through its
subsidiary Holigen, which has a license for cannabis cultivation in Portugal
and operates GMP licensed facilities in Portugal.

Flowr aims to support improving outcomes through responsible cannabis use and,
as an established expert in cannabis cultivation, strives to be the brand of
choice for consumers and patients seeking the highest-quality craftsmanship
and product consistency across a portfolio of differentiated cannabis

For more information, please visit flowrcorp.com
or follow Flowr on Twitter: @FlowrCanada and LinkedIn: The Flowr Corporation.

On behalf of The Flowr Corporation:
Lance Emanuel
President and Interim CEO


Irina Hossu
Chief Financial Officer

Forward-Looking Information:

Certain statements made in this press release may constitute
“forward-looking information”, “future oriented financial information”
or “financial outlooks” (collectively, “forward-looking information”)
within the meaning of applicable securities laws. Forward-looking information
may relate to anticipated events or results including, but not limited to: the
Company’s expectation that it will build on its achievements as it continues
to invest in sales and marketing; the Company’s expectations for sales of
product in Quebec; Flowr servicing the global medical cannabis market and
operating GMP facilities in Portugal; Flowr’s business, production and
products; Flowr’s plans to provide premium quality cannabis to adult use
recreational and medical markets; EU-GMP certification opening the medicinal
cannabis opportunity for the Company in global markets; the Company being well
positioned to distribute EU-GMP compliant product into underserviced markets;
Flowr’s ability to realize revenue from the Company’s European operations
within the anticipated timeframe or at all; Flowr’s ability to establish
sales and distribution channels in Europe to deliver medicinal cannabis to
underserviced markets; expectations with respect to the anticipated timing for
harvests, propagation, completion of construction and installation of
extraction infrastructure at the Company’s Sintra facility; the Company
being unable to commence GMP packaging and commercial sales within the
anticipated timeframe or at all; Flowr’s ability to service the global
medical cannabis market and/or operate GMP-designed manufacturing facilities
in Portugal; the addition of a new chief executive officer commencing in May,
2021; the sale of medical cannabis in pharmacies in Portugal representing a
watershed moment for cannabis in the E.U.; the Company’s ability to complete
offering(s) of its securities under the Final Shelf Prospectus; the expected
impact of the strategic review decisions on the Company; the actual costs of
savings from the Company’s restructuring initiatives, including with respect
to its workforce; the Company’s plans to divest its interests in certain of
its subsidiaries; the Company’s ability to obtain licensing from Health
Canada and other regulatory authorities with respect to its properties and
facilities; future legislative and regulatory developments in Canada and
elsewhere; the cannabis industry in Canada generally; the ability of Flowr to
implement its business strategies; and the ability of Flowr to produce or sell
premium quality cannabis. Particularly, information regarding our expectations
of future results, targets, performance achievements, prospects or
opportunities is forward-looking information. Often, but not always,
forward-looking statements can be identified by the use of forward-looking
terminology such as “may”, “will”, “expect”, “believe”,
“estimate”, “plan”, “could”, “should”, “would”,
“outlook”, “forecast”, “anticipate”, “foresee”, “continue”
or the negative of these terms or variations of them or similar terminology.
Forward-looking information is current as of the date it is made and is based
on reasonable estimates and assumptions made by us at the relevant time in
light of our experience and perception of historical trends, current
conditions and expected future developments, as well as other factors that we
believe are appropriate and reasonable in the circumstances. To the extent any
forward-looking information in this press release constitutes “future
oriented financial information” or “financial outlooks”, within the
meaning of applicable securities laws, the purpose of such information being
provided is to demonstrate the potential of the Company and readers are
cautioned that this information may not be appropriate for any other purpose.
However, we do not undertake to update any such forward-looking information
whether as a result of new information, future events or otherwise, except as
required under applicable securities laws in Canada. There can be no assurance
that such estimates and assumptions will prove to be correct. Many factors
could cause our actual results, level of activity, performance or achievements
or future events or developments to differ materially from those expressed or
implied by the forward-looking information as discussed in the “Risk
Factors” section of the Company’s 2020 Annual Information Form dated April
28, 2021 (the “AIF”). A copy of the AIF and the Company’s other publicly
filed documents can be accessed under the Company’s profile on the System
for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.
The Company cautions that the list of risk factors and uncertainties described
in the AIF is not exhaustive and other factors could also adversely affect its
results. Readers are urged to consider the risks, uncertainties and
assumptions carefully in evaluating the forward-looking information and are
cautioned not to place undue reliance on such information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.


GlobeNewswire, Inc. 2021
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