The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) (“Flowr” or the “Company”) announced that it has restructured approximately 25% of its workforce globally, which is expected to result in an annual reduction of headcount expenses in excess of approximately $6 million. In an effort to tighten the timeline towards becoming cash flow positive in H2 2020, the Company has decided to focus its resources near term on the Premium Canadian dried flower market, specifically to continue building on the positive sales momentum it has been seeing with its Flowr branded BC Pink Kush and other high THC strains expected to be launched in the marketplace in 2020.

"The changes we announced today were part of an ongoing comprehensive review of our operations to reduce costs, focus on the highest value priorities and accelerate cash flow generation, in addition to some of the anticipated macro-economic headwinds stemming from COVID-19. This was an extremely difficult decision that we did not take lightly and would like to thank former and current employees for their tremendous contributions. The resulting company will be a leaner, more efficient organization. Our fundamental thesis that consumers demand quality dried flower has been proven correct as evidenced by heavy demand for our flagship strain, BC Pink Kush. We also look forward to the release of our newest high THC strains BC Louis XIII and BC Tahoe OG in the coming months. Given that our Kelowna 1 facility (“Kelowna 1”) is now fully operational, we expect to see a step function change in production and sales beginning in the second quarter. While we continue to be very optimistic about our derivative form factor product plans, in light of the current macro environment we feel it’s prudent to delay further material investments in these areas and focus on our core competency – producing premium indoor-grown dried flower and building the Flowr brand in the Canadian recreational market," commented Vinay Tolia, CEO of Flowr.

OPERATIONAL UPDATES: CANADA

The Company has advanced its Kelowna Campus to be a single hub for all aspects of cultivation, processing and packaging to service the Canadian cannabis market. The Company has only invested in either highly controlled indoor growing environments for premium high THC dried cannabis (Kelowna 1) or low cost outdoor and shade-house production for extraction (Flowr Forest). Notably, the Company has not invested in traditional greenhouses, which are more expensive to build and operate, because it believes that they cannot produce premium smokable products. Flowr has proven that low cost outdoor and shade-house grows provide quality inputs, especially for use in extraction. Recently, the Company launched new corporate and Canadian recreational websites, consistent with its brand marketing strategies.

Kelowna 1 Indoor Facility

  • On February 24, 2020, the Company announced it had received approval from Health Canada to open an additional 10 grow rooms, bringing the total to 20 at the Facility. The ultimate production capacity is expected to be approximately 10,000 kg of premium cannabis when fully optimized.
  • Since that announcement, the Company has propagated 7 of the newly licensed grow rooms with the remaining 3 to be planted within the next 30 days.
  • The Company has taken preventative measures to remain a reliable supply chain partner during the COVID-19 pandemic.

Outdoor and Shade-House Facility (“Flowr Forest”)

  • The Company has decided to delay the launch of its live resin product until its Canadian dried flower operations are generating positive cash flow.
  • As a result, the Company has decided to selectively plant outdoors to enable optionality for a full outdoor grow to support its revised live resin launch plans.

Flowr/Hawthorne R&D Facility (“R&D Facility”)

Flowr and Hawthorne have entered a strategic R&D alliance to build a state of the art, 45,000 square foot R&D Facility, the 1st of its kind in Canada.

  • Construction of the R&D Facility is substantially complete. The Company submitted the evidence package to Health Canada to license the first floor on February 24, 2020 and expects to receive licensing approval in Q2 2020.
  • Once operational, the R&D Facility will allow Flowr to stay on the leading edge of cultivation technology and maximize plant health and yields.

GLOBAL OPERATIONS

Portugal

Sintra, Portugal Indoor Facility

Sintra is a highly controlled indoor cultivation, extract processing and finished product packaging facility. Construction of the facility is substantially complete with 3 of the 6 total grow rooms currently operational. Obtaining GMP certification is both a critical step to the production and sales of a high value medicinal product which can be distributed to any country within in the EU and is Flowr’s top priority within its Holigen business. 

  • The Company had its final GMP inspection in September 2019 and still anticipates receipt of EU-GMP certification.
  • Construction of the Sintra Facility is substantially complete.

Aljustrel, Portugal

Aljustrel is a 7 million square foot outdoor cultivation facility which has been deemed a Project of National Interest by the Portuguese Government, the only cannabis related project to receive this designation. The Company expects a phased ramp up of production at Aljustrel to match capacity with the revenue potential of an expanding European medicinal cannabis market.

  • The Company plans to plant over 1,000,000 square feet of cultivation area in 2020 with a harvest expected in Q4 2020.

Australia

The Company maintains its GMP compliant packaging facility in Australia. Flowr expects its assets in Australia to be a hub for distribution and sales of medicinal cannabis into the Australasian region.

  • During the first quarter, Holigen Australia received a modest shipment of premium dried flower from our Kelowna 1 Facility to be sold and distributed into the Australian market. 

FINANCIAL UPDATE

Further to the Company’s announcement on November 19, 2019 relating to the entering into of a credit agreement with ATB Financial (“ATB”) for access to debt financing of up to $25 million, on February 28, 2020, the Company completed its second draw-down of $3.2 million from its term facility, and $500,000 from its revolving operating credit facility under the credit agreement. Furthermore, the Company is assessing various financing alternatives to address near term working capital needs.

About The Flowr Corporation

The Flowr Corporation is a Toronto-headquartered cannabis company with operations in Canada, Europe, and Australia. 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 currently under construction. 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 will operate GMP-designed manufacturing facilities in Portugal and Australia.

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 products.

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

On behalf of The Flowr Corporation:

Vinay ToliaCEO and Director

Contact Info:

INVESTORS & MEDIA:Thierry ElmalehHead of Capital Markets(877) 356-9726 ext. 1528thierry@flowr.ca

Future-Oriented Financial Information

To the extent any forward-looking statements in this press release constitutes future-oriented financial information or financial outlooks within the meaning of securities laws, such information is being provided to demonstrate the potential financial performance of Flowr and readers are cautioned that this information may not be appropriate for any other purpose and that they should not place undue reliance on such future-oriented financial information and financial outlooks. Future-oriented financial information and financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to the risks set out below under “Forward-Looking Information and Statements”.

Forward-Looking Information and Statements

This press release contains “forward-looking information” within the meaning of Canadian Securities laws, which may include but is not limited to: the Company taking steps to ensure continuity of production at its flagship Kelowna facility; the Company’s primary strategic focus over the next six months being the Canadian premium dried flower market; the Company delaying investments in Rec 2.0 products until it becomes cash flow positive; the expected timing for receipt of GMP certification in Portugal; the expected timing for planting and harvesting an outdoor crop in Portugal; Flowr’s plan to get to cash flow positive in H2 2020 by focusing on premium indoor grown dried flower; the Company’s expected annual reduction in headcount expenses resulting from restructuring its workforce globally; the Company’s expected timeline towards becoming cash flow positive in H2 2020; the Company focusing its resources near term on the Premium Canadian dried flower market; the Company continuing to build on the positive sales momentum it has been seeing with its Flowr branded BC Pink Kush and other high THC strains expected to be launched in the marketplace in 2020; Flowr reducing costs, focusing on the highest value priorities and accelerating cash flow generation; Flowr becoming a leaner, more efficient organization; Flowr releasing new high THC strains BC Louis XIII and BC Tahoe OG in the coming months; the Company’s expectation that it will see a step function change in production and sales beginning in the second quarter; the Company continuing to be very optimistic about its derivative form factor product plans but delaying further material investments in these areas; the Company focusing on its core competency, including with respect to producing premium indoor-grown dried flower and building the Flowr brand in the Canadian recreational market; the Company’s belief that traditional greenhouses cannot produce premium smokable products; Flowr’s expectation for the ultimate production capacity of Kelowna 1 when fully optimized; Flowr’s expected timeline for planting the remaining newly licensed grow rooms at Kelowna 1; the Company remaining a reliable supply chain partner during the COVID-19 pandemic; the Company delaying the launch of its live resin product until its Canadian dried flower operations are generating positive cash flow; the Company selectively planting outdoors at Flowr Forest to enable optionality for a full outdoor grow to support its revised live resin launch plans; the Company’s expectations for the receipt of licensing approval for the R&D Facility; the R&D Facility allowing Flowr to stay on the leading edge of cultivation technology and maximize plant health and yields; obtaining GMP certification being Flowr’s top priority within its Holigen business; the Company’s expectations for a phased ramp up of production at Aljustrel to match capacity with the revenue potential of an expanding European medicinal cannabis market; the Company’s plan to plant over 1,000,000 square feet of cultivation area in 2020 with a harvest expected in Q4 2020 at its Aljustrel facility; Flowr’s expectation that its assets in Australia will be a hub for distribution and sales of medicinal cannabis into the Australasian region; the Company assessing various financing alternatives to address near term working capital needs; Flowr servicing the global medical cannabis market and operating GMP-designed manufacturing facilities in Portugal and Australia; Flowr supporting improving outcomes through responsible cannabis use and striving to be the brand of choice for consumers and patients seeking highest-quality craftsmanship and product consistency; and Flowr’s business, production and products. 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 information and 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 such information and 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 risks relating to: the Company being unable to ensure continuity of production at its flagship Kelowna facility; the Company not becoming cash flow positive on the anticipated timeline, or at all; the Company not receiving GMP certification in Portugal on the anticipated timeline, or at all; Flowr being unable to plant and harvest an outdoor crop in Portugal on the anticipated timeline, or at all; Flowr being unable to get to cash flow positive in H2 2020 by focusing on premium indoor grown dried flower, or at all; the Company’s not realizing the expected annual reduction in headcount expenses resulting from restructuring its workforce globally; the Company being unable to focus its resources near term on the Premium Canadian dried flower market; the Company being unable to continue building on the positive sales momentum it has been seeing with its Flowr branded BC Pink Kush and other high THC strains expected to be launched in the marketplace in 2020; Flowr being unable to launch other high THC strains on the anticipated timeline, or at all; the Company being unable to reduce costs, focus on the highest value priorities and accelerate cash flow generation; Flowr being unable to become a leaner, more efficient organization; the Company not realizing a step function change in production and sales on the anticipated timeline, or at all; the Company being unable to focus on its core competency; the ultimate production capacity of Kelowna 1 not reaching expectations, even when fully optimized; the Company being unable to plant the remaining newly licensed grow rooms at Kelowna 1 on the anticipated timeline, or at all; the Company being unable to remain a reliable supply chain partner during the COVID-19 pandemic; the Company being unable to selectively plant outdoors to enable optionality for a full outdoor grow to support its revised live resin launch plans; the Company not receiving licensing approval for the R&D Facility on the anticipated timeline, or at all; the R&D Facility not allowing Flowr to stay on the leading edge of cultivation technology or to maximize plant health and yields; the Company’s being unable to ramp up production at Aljustrel to match capacity with the revenue potential of an expanding European medicinal cannabis market on the anticipated timeline, or at all; the Company being unable to plant over 1,000,000 square feet of cultivation area in 2020 with a harvest expected in Q4 2020 at its Aljustrel facility on the anticipated timeline, or at all; Flowr’s assets in Australia not being a hub for distribution and sales of medicinal cannabis into the Australasian region; the Company being unable to access any financing alternatives to address near term working capital needs; the impact of the COVID-19 outbreak on the business and financial conditions of the Company; Flowr being unable to service the global medical cannabis market and/or operate GMP-designed manufacturing facilities in Portugal and Australia; Flowr being unable to support improving outcomes through responsible cannabis use and/or striving to be the brand of choice for consumers and patients seeking highest-quality craftsmanship and product consistency; the construction and development of the Company’s cultivation and production facilities; general economic and stock market conditions; adverse industry events; loss of markets; future legislative and regulatory developments in Canada and elsewhere; the cannabis industry in Canada generally; the ability of Flowr to implement its business strategies; Flowr’s inability to produce or sell premium quality cannabis, 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 or statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking information or statement can be guaranteed. Except as required by applicable securities laws, forward-looking information and statements speak only as of the date on which they are made and Flowr undertakes no obligation to publicly update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise. When considering such forward-looking information and statements, readers should keep in mind the risk factors and other cautionary statements in Flowr’s Annual Information Form dated April 3, 2019 (the “AIF”) and filed with the applicable securities regulatory authorities in Canada. The risk factors and other factors noted in the AIF could cause actual events or results to differ materially from those described in any forward-looking information or statements.

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.

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