Market Overview

The Flowr Corporation Announces Third Quarter 2019 Results and Provides Corporate Update


TORONTO, Nov. 26, 2019 (GLOBE NEWSWIRE) -- The Flowr Corporation ((TSX.V: FLWR, OTC:FLWPF) ("Flowr" or the "Company") herein announces its financial and operational results for the third quarter ended September 30, 2019. In addition, the Company is providing a comprehensive corporate update to supplement third quarter 2019 results.

Select recent operational and financial highlights since the beginning of the third quarter 2019 include:

  • The Company generated gross revenue of approximately $2.1 million and net revenue of approximately $1.3 million net of excise taxes, pricing concessions and product returns. These figures exclude approximately $0.3 million of design and construction fees earned from Hawthorne Canada Limited in relation to the construction of the research and development ("R&D") facility on its Kelowna Campus;
  • The Company closed on the remaining 80.2% interest in Holigen Holdings Limited ("Holigen") in August 2019, creating a global cannabis Company with access to 7 million square feet of anticipated low cost EU-GMP compliant outdoor grown cannabis in southern Portugal, to supply the emerging and rapidly growing European and Australasian medicinal cannabis markets;
  • The Company completed its first outdoor and poly-film shade-house harvest from Flowr Forest, yielding approximately 3,100 kilograms;
  • The construction of Kelowna 1, Flowr's flagship indoor facility, is substantially complete and the final evidence package for licensing has been submitted to Health Canada for approval which when approved will double the number of grow rooms in operation; and
  • The Company strengthened its financial position with the closing of a $43.5 million equity financing in August 2019, and a $25 million credit facility (with a first tranche of gross funding on closing of approximately $20 million) in November 2019.

The Company's progress to-date has positioned Flowr to achieve its objective to be cash flow positive in the second half of 2020, which is aided by the Company's efficient infrastructure footprint that supports addressing the global recreational and medical market from three locations.


"Our third quarter revenues were short of expectations as we continued to manage construction and production activities as well as ramp up sales and marketing. While we are disappointed in the delay of our commercial ramp up, we are excited to be exiting 2019 with our infrastructure now in place globally and we are confident in our ability to effectively scale our business in 2020. Our strategy is driven by a focus on building the right facilities, meaning no large-scale greenhouses, and growing quality product consumers want, instead of targeting scale before proving out our business. In Canada, we are on pace to end the year with our most significant capital expenditures complete and, for the first time, we will be operating without the additional burden of cultivating while simultaneously completing construction on our flagship indoor facility. In addition, we are in the process of introducing new genetics into our production to drive further operational improvements and enhance our product mix. We continue to believe that the Canadian industry will be in short supply of premium dry flower." commented Vinay Tolia, Flowr's Chief Executive Officer. "Subsequent to quarter end, we completed our first harvest at Flowr Forest. More than half of that harvest was flash frozen in anticipation of producing live resin products including vape pens, that we believe will give us a highly differentiated product offering.

"Globally, we continue to target an enormous opportunity from an efficient footprint as the integration of Holigen is advancing as expected. We continue to invest significantly in our global operations and our first cannabis harvest from Portugal is expected later this year. Additionally, we are advancing the EU-GMP certification process for Sintra, our indoor cultivation and manufacturing facility in Portugal, with an eye on having GMP compliant product available for sale in early 2020. Based on demand for EU-GMP compliant product in Germany, Australia, and other countries, we believe we are well positioned to distribute products into these underserviced markets."


The following table summarizes the Company's key financial and operational results:

In thousands of Canadian dollars,
(except per share and grams metrics)
Three months ended September 30

  Nine months ended September 30

  2019   2018   2019   2018  
Grams produced 446,854   221,872   1,186,570   358,768  
Grams sold 226,807   -   777,626   -  
Average net realized price per gram 8.03   -   7.23   -  
Net revenue 1,344   -   5,154   -  
Gross profit (loss) before fair value adjustments 46   259   230   (642 )
Selling, General and Administrative expense 6,085   1,510   15,054   4,245  
Share-based compensation 3,442   2,378   9,036   3,851  
Net income/(loss) (14,984 ) (5,634 ) (9,823 ) (11,848 )
Basic earnings/(loss) per share (0.13 ) (0.08 ) (0.09 ) (0.15 )
Diluted earnings/(loss) per share (0.13 ) (0.08 ) (0.09 ) (0.15 )
Cash used in investing activities (20,318 ) (4,038 ) (47,158 ) (11,061 )
Cash from financing activities 43,976   36,944   62,373   49,029  
  • During the third quarter of 2019, the Company produced 447 kilograms of dried cannabis, a decrease of 3% compared to the second quarter. The primary reason for this decrease was the use of two rooms within Kelowna 1 in the second quarter and into the beginning of the third quarter to support clone production in preparation for planting the Flowr Forest and for shipment to Portugal for both indoor and outdoor grows, rather than using those rooms for growing product. As a result, indoor production was reduced by approximately 120 kg and these rooms were not propagated until the middle of the third quarter, with production harvested too late to be sold during the third quarter.
  • Net revenue for the third quarter was approximately $1.3 million. Revenues were impacted by the concurrent construction and production activities at Kelowna 1, as well as the timing of the propagation of clones for Flowr Forest, the Company's outdoor and shade-house facility, as well as our assets in Portugal. 
  • Furthermore, third quarter net revenue reflected approximately $0.4 million in provisions for product returns and pricing adjustments. The majority of the provisions were due to slower selling strains that the Company is sunsetting in favor of new genetics which the Company believes will better address consumer demand. The Company's production planning and sales during the first year of legalized recreational cannabis in Canada were hindered by the lack of reliable consumer insights. Going forward, the Company is prioritizing data acquisition to ensure its production planning is driven by consumer insights and that its portfolio of finished products will address consumers' preferences.

The Company expects production from 10 rooms during most of the fourth quarter to support an increase in sales volumes. 

The following table summarizes the Company's financial results for the three and nine months ended September 30, 2019:

In thousands of CAD dollars Three months ended September 30
  Nine months ended September 30
  2019   2018   2019   2018  
Net income/(loss) (14,984 ) (5,634 ) (9,823 ) (11,848 )
Depreciation and amortization 793   7   1,926   20  
Unrealized (gains) losses on fair value adjustments of biological assets (3,597 ) (262 ) (5,300 ) 585  
Fair value adjustments on inventory sold 269   -   438   -  
Share-based compensation
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