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.
MANAGEMENT COMMENTARY
“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.”
THIRD QUARTER 2019 RESULTS
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 |
3,442 |
|
2,379 |
|
9,036 |
|
3,852 |
|
Transaction and listing costs |
1,086 |
|
1,803 |
|
1,086 |
|
1,803 |
|
Unrealized loss on valuation of warrant investment |
63 |
|
277 |
|
434 |
|
336 |
|
Loss/(Gain) on acquisition of investment in Holigen |
7,098 |
|
- |
|
(11,652 |
) |
- |
|
Interest
expense (income) |
210 |
|
- |
|
406 |
|
2 |
|
Adjusted
EBITDA |
(5,620 |
) |
(1, 620 |
) |
(13,449 |
) |
(5,250 |
) |
|
|
|
Adjusted EBITDA (Non-IFRS Measure)
Adjusted EBITDA is defined as net loss, plus
(minus) income taxes (recovery), plus (minus) interest income
(expense), net, plus depreciation and amortization, plus
share-based compensation, plus (minus) non-cash fair value
adjustments on biological assets and inventory sold, plus listing
expense costs and plus (minus) loss (gain) on investments.
Management believes this measure provides useful information as it
is a commonly used measure in the capital markets and as it is a
close proxy for repeatable cash used by operations.
For a full discussion of Flowr’s operational and
financial results for the three and nine months ended September 30,
2019, please refer to the Company’s third quarter 2019 Management’s
Discussion & Analysis and Financial Statements, which have been
filed on SEDAR.
CANADIAN OPERATIONS
The Company is advancing its plan for 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 (like Kelowna 1) or low cost outdoor and
shade-house production for extraction (like Flowr Forest). Notably,
the Company has not invested in expensive greenhouses which it
believes are undesirable growing facilities given they cannot
produce high quality premium smokable products and at the same
time, are much more expensive to build and operate than low cost
outdoor and shade-house grows providing similar quality inputs for
extraction.
Kelowna 1 Indoor Facility
Kelowna 1 is a state-of-the-art indoor facility
that allows for a highly controlled cultivation environment, which
the Company expects will produce some of the highest caliber dried
flower available in Canada. When Kelowna 1 is fully licensed and
“dialed in”, the Company expects to produce approximately 10,000 kg
of premium cannabis per year.
- Construction of the 85,000 square foot facility is largely
complete and is expected to be fully operational in early 2020
pending Health Canada approval.
- Currently, 10 of the planned 20 rooms are licensed and fully
operational, with the remaining rooms to come online when they are
licensed. The evidence package and licensing application for rooms
11-20 have been submitted to Health Canada. The Company expects to
double its operating capacity with all 20 grow rooms projected to
be operational in the first quarter of 2020 with production from
new rooms coming online in the second quarter onwards, with a
deliberate staggering to ensure efficient turnover of production
rooms.
- The Company is in receipt of an automated packaging line with
installation and commissioning pending licensing of the remainder
of Kelowna 1.
- Flowr plans to deliver finished products from new genetics into
the marketplace in 2020, which are expected to deliver higher
yields as well as support the rollout of an expanded line of high
THC products.
- The Company expects to continue to realize premium pricing
relative to the broader adult-use market.
- The total capex for Kelowna 1 is estimated at $36.8 million,
all of which is already funded.
Flowr Forest Outdoor and Greenhouse Facility
(“Flowr Forest”)
Flowr Forest is located adjacent to Kelowna 1
and currently consists of 42 poly-film shade-houses totaling
189,000 square feet and an outdoor cultivation area of 150,000
square feet. With a full year to harvest, Flowr Forest is expected
to produce 10,000 kilograms per annum. Flowr Forest is also
licensed for storage of harvested cannabis. The Company’s is
planning to launch a live resin vape offering as its first extract
product, with other concentrates to follow.
- The Company completed the first harvest of the outdoor area on
October 11, 2019, with the shade-houses completed in early November
2019. In total, the Company harvested approximately 3,100 kilograms
of dried flower equivalent. The initial harvest should provide
sufficient cannabis for the planned 2020 launch of Flowr’s extract
product offerings in Canada.
- Flowr Forest is expected to be propagated with its next harvest
in the second quarter of 2020.
- The Company believes it will have its live resin vape offering
available in the market in the second half of 2020. Revised timing
is due to a more modest development schedule and changes to planned
extraction infrastructure installation.
- The Company currently expects all the required infrastructure
for a live resin vape offering and other extracts to be in place by
the end of the first quarter of 2020.
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, 60,000 square foot
R&D Facility, the 1st of its kind in Canada.
- Construction of the R&D Facility continues to progress, and
the Company expects to submit the evidence package to license the
first floor in the first quarter of 2020.
GLOBAL OPERATIONS
In Europe, the Company is focusing its
international efforts on the construction of an indoor cultivation
and processing facility in Sintra, Portugal, and a large-scale
outdoor cultivation and partial processing facility in Aljustrel,
Portugal. The Company is targeting first revenue from its European
operations in the first half of 2020 with a more meaningful
contribution and an accelerated ramp-up during the second half of
2020. The Company is in the process of establishing sales and
distribution channels in Europe and Australia, which are expected
to provide an entry to deliver medicinal cannabis to currently
underserviced markets.
Portugal
Sintra, Portugal Indoor Facility
Sintra is an indoor cultivation, extract
processing and finished product packaging facility. Construction of
the facility is 70 per cent complete.
- The Company had its final GMP inspection in September 2019 and
pending final approval, the Company anticipates receipt of EU-GMP
certification in early 2020. This certification is a critical step
to the production and sales of a high value medicinal product which
can be distributed to any country where federally legal medicinal
cannabis frameworks exist.
- Three cultivation rooms are complete with the first harvest
from the first room expected in December 2019. All three rooms are
expected to be propagated with plants by year end.
- Completion of the remaining three grow rooms for a total of six
in the facility is expected in the first quarter of
2020.
- The oil extraction infrastructure is expected to be installed
and operational in the second quarter of 2020 with GMP packaging
expected to be online by mid-2020.
- Based on current timelines, the Company expects to begin
commercial sales of dried cannabis flower in the first quarter of
2020 and of cannabis oils by mid-2020, pending all regulatory
approvals.
- At full capacity, Sintra is expected to grow up to
approximately 3,000 kilograms of dried flower and process up to
30,000kgs of flower into derivative products using inputs from our
substantial outdoor grow in Aljustrel.
Aljustrel, Portugal
Aljustrel is a 7 million square foot outdoor
cultivation facility which the Company expects will include a
partial extraction and processing facility. Flowr’s Aljustrel asset
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.
- 100,000 square feet of cultivation area was initially
propagated in August 2019. This initial crop is expected to be
completed by the end of the year.
- In 2020, the Company expects to deliver a minimum of two
harvests from approximately 1,000,000 square feet of planted
cultivation area for each harvest. The Company expects these
harvests to yield approximately 15,000 – 30,000 kilograms of dry
flower.
Australia
The Company maintains its GMP compliant
packaging facilities in Australia, which were obtained in November
2018. Flowr expects its assets in Australia to be a hub for
distribution and sales of medicinal cannabis into the Australasian
region.
FINANCIAL UPDATE
- As of September 30, 2019, the Company has cash and cash
equivalents of approximately $25 million, which is sufficient to
complete the above development plans as well as ongoing corporate
requirements.
- The Company anticipates becoming cash flow positive in the
second half of 2020 spurred by the expected completed ramp-up of
Kelowna 1, the beginning of sales of its live resin vape offering
and the ramp-up of its European operations.
- Recently, the Company closed a $25 million non-dilutive credit
facility (“the ATB Facility”) with a syndicate of lenders led by
ATB Financial, with a first tranche of funding on closing of
approximately $20million (subject to certain holdbacks), giving the
Company sufficient liquidity to meet its near-term strategic
objectives.
The board of directors of the Company (the
“Board”) has approved the granting of 10,000 incentive stock
options (the “Options”) and 140,000 restricted share units (the
“RSUs”) to a certain officer and a director of the Company. The
Options are exercisable at a price of CAD$3.08 per share for a
period of five years. The Options will vest in equal tranches of
thirty-three and one-third percent (33⅓%) over a period of three
years. The RSUs will vest in equal tranches of thirty-three and
one-third percent (33⅓%) over a period of three years.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and
webcast to review these results today at 5:30 p.m. Eastern
Time.
Conference call and webcast details are as
follows:
|
Toll Free:
1-833-227-5845 |
|
Toll/International: 1-647-689-4072 |
|
Webcast: flowr.ca/investors |
Conference call replay details are as
follows:
|
Toll Free:
1-800-585-8367 |
|
Toll/International: 1-416-621-4642 |
|
Passcode: 8052839 |
|
Webcast: flowr.ca/investors |
The replay of the conference call will be
available through midnight on Tuesday, December 3, 2019.
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 flowr.ca or
follow Flowr on Twitter: @FlowrCanada and LinkedIn: The Flowr
Corporation.
On behalf of The Flowr Corporation:Vinay
ToliaCEO and Director
CONTACT INFORMATION:
MEDIA: Sean GriffinVice President, Communications & Public
Relations(877) 356-9726 ext. 1526sean.griffin@flowr.ca
INVESTORS:Thierry ElmalehHead of Capital Markets(877) 356-9726
ext. 1528thierry@flowr.ca
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 being in a position
to scale business in 2020; Flowr having access to 7 million square
feet of low cost EU-CMP compliant outdoor grown cannabis to supply
the emerging and rapidly growing European and Australasian
medicinal cannabis markets; Flowr doubling the number of grow rooms
in operation at Kelowna 1; Flowr being positioned to achieve its
objective to be cash flow positive in the second half of 2020;
Flowr’s objective to be cash flow positive in the second half of
2020 being aided by the Company’s efficient infrastructure
footprint that supports addressing the global recreational and
medical market; the Company’s progress towards its objectives and
those objectives positioning the Company for long term success; the
Company being on pace in Canada to complete 2019 with its most
significant capital expenditures complete; the Company operating
without the additional burden of cultivating while simultaneously
completing construction at Kelowna 1; new genetics driving further
operational improvements and enhancing the Company’s product mix;
the Company’s belief that the Canadian industry will continue to
experience short supply of premium dry flower; the anticipated
launch of the Company’s live resin products, including vape pens;
the Company’s belief that live resin products, including vape pens,
will give the Company a highly differentiated product offering;
Flowr continuing to target an enormous opportunity from an
efficient footprint; the Company’s expectations, including timing,
for the first harvest from Portugal; the Company’s expectations for
EU-GMP certification at its Sintra facility; the Company’s
expectation that it will have GMP compliant product for sale in
early 2020; the timing of the initial crop and harvesting thereof
at Aljustrel; the Company’s belief that it is well positioned to
distribute EU-GMP compliant product into underserviced markets; the
Company’s belief that sun setting certain strains in favour of new
genetics will address consumer demand; the Company prioritizing
data acquisition to ensure production planning is driven by
consumer insights and that its portfolio of finished products will
address consumer preference; the Company’s expectation that
production from additional grow rooms during the fourth quarter
will support an increase in sales volume; Flowr advancing its plan
for its Kelowna Campus to be a single hub for all aspects of
cultivation, processing and packaging to service the Canadian
cannabis market; the Company’s belief that expensive greenhouses
are undesirable growing facilities; the Company’s expectation that
Kelowna 1 will produce some of the highest caliber dried flower
available in Canada; the Company’s expectations for production
capacity at Kelowna 1 once it is fully licensed and “dialed in”;
the timeline for Kelowna 1 becoming fully operational; the
Company’s expectation that it will double its operating capacity at
Kelowna 1 in the first quarter of 2020; the anticipated timing of
the Kelowna 1 grow rooms becoming operational and producing
product; the anticipated timeline for installing an automated
packaging line at Kelowna 1; Flowr delivering finished products
from new genetics into the marketplace in 2020; Flowr’s expectation
that new genetics will deliver higher yields as well as support the
rollout of an expanded line of high THC products; the Company’s
expectation for Kelowna 1’s production run-rate at the end of 2020;
the Company’s expectation that it will continue to realize premium
pricing relative to the broader adult-use market; the estimated
total capex for Kelowna 1 and such capex being fully funded; the
expected production per annum at Flowr Forest; the Company’s plan
to launch a live resin vape offering as its first extract product;
the anticipated timing for the launch of a live resin vape product,
including the timing for all required infrastructure related
thereto being in place; the Company’s intention to launch other
concentrate products; the initial harvest at Flowr Forest being
sufficient for the planned launch in 2020 of Flowr’s extract
product offerings in Canada; the Company’s expectations for
propagation and harvesting Flowr Forest in 2020; the anticipated
timing for submitting an evidence package to license the first
floor of the R&D Facility; the construction of facilities in
Portugal; the anticipated timing for revenue from the Company’s
European operations; the Company’s expectations with respect to
establishing sales and distribution channels in Europe and
Australia to deliver medicinal cannabis to underserviced markets;
the anticipated timing for receipt of EU-GMP certification and the
timing thereof; the anticipated timing for harvests, propagation,
completion of construction and installation of extraction
infrastructure at the Company’s Sintra facility; the Company’s
expectations for the commencement of GMP packaging and commercial
sales in Europe; the Company’s expectations for annual production
and processing capacity at its Sintra facility; the Company’s
expectation that its Aljustrel facility will include a partial
extraction and processing facility; the Company’s expectations
regarding a phased ramp up of production at its Aljustrel facility;
the anticipated timelines for harvesting an initial crop at the
Company’s Aljustrel facility; the Company’s expectations for
harvests at its Aljustrel facility in 2020; 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’s expectations regarding becoming cash flow positive,
including the timing thereof and contributing factors thereto;
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 craftmanship and product
consistency; and Flowr’s business, production and products and
Flowr’s plans to provide premium quality cannabis to adult use
recreational and medical markets. 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: Flowr’s inability to scale its business in 2020, which could
materially adversely impact its financial condition and result in
breach of its debt arrangements; Flowr being unable to complete its
initial crop and harvest at Aljustrel, which could materially
adversely impact its competitive position globally and its business
and operations; Flowr being unable to access 7 million square feet
of low cost EU-CMP compliant outdoor grown cannabis to supply the
emerging and rapidly growing European and Australasian medicinal
cannabis markets; the additional grow rooms at Kelowna 1 not
becoming operational as anticipated or at all; Flowr being unable
achieve its objective to be cash flow positive in the second half
of 2020; Company’s infrastructure being unable to support Flowr’s
objective to be cash flow positive in the second half of 2020; the
Company’s being unable to complete its objectives and/or those
objectives not positioning the Company for long term success; the
Company being unable to get the additional grow rooms at Kelowna 1
operational and producing product in the timelines described
herein, which would materially adversely impact its ability to meet
its revenue targets in 2020 and also become cash flow positive; the
Company not completing its most significant capital expenditures in
Canada in 2019; the Company needing to continue cultivating while
simultaneously completing construction at Kelowna 1; new genetics
not driving further operational improvements and/or enhancing the
Company’s product mix; the Canadian industry not being in short
supply of premium dry flower; the failure to launch the Company’s
live resin products, including vape pens, and/or the failure of
such products after launch; live resin products, including vape
pens, not providing the Company a highly differentiated product
offering; the Company’s expectations, including timing, for the
first harvest from Portugal not being realized; the Company’s
expectations for EU-GMP certification at its Sintra facility not
being realized; the Company not having GMP compliant product for
sale in early 2020; the Company not being well positioned to
distribute EU-GMP compliant product into underserviced markets; the
Company being unable to address consumer demand with new genetics;
the Company being unable to prioritize data acquisition to ensure
production planning is driven by consumer insights and that its
portfolio of finished products will address consumer preference;
production from additional grow rooms during the fourth quarter not
being able to support an increase in sales volume; Flowr being
unable to advance its plan for its Kelowna Campus to be a single
hub for all aspects of cultivation, processing and packaging to
service the Canadian cannabis market; Kelowna 1 being unable to
produce high caliber dried flower; production capacity at Kelowna 1
once it is fully licensed and “dialed in” being less than expected;
Kelowna 1 not becoming fully operational in the anticipated
timeframe or at all; the Company being unable to double its
operating capacity at Kelowna 1 in the first quarter of 2020; the
Company being unable to install an automated packaging line at
Kelowna 1 in the anticipated timeframe or at all; Flowr being
unable to deliver finished products from new genetics into the
marketplace in 2020; new genetics not delivering higher yields
and/or not supporting the rollout of an expanded line of high THC
products; Kelowna 1 being unable to reach the anticipated
production run-rate at the end of 2020; the Company not realizing
premium pricing relative to the broader adult-use market; any
inaccuracies in the estimated total capex for Kelowna 1; Flowr
Forest’s production per annum being less than anticipated; the
Company being unable to execute its plan to launch a live resin
vape offering as its first extract product, including with respect
to anticipated timing; the Company being unable to launch other
concentrate products; the initial harvest at Flowr Forest being
insufficient for the planned launch in 2020 of Flowr’s extract
product offerings in Canada; the Company being unable to satisfy
its expectations for propagation and harvesting Flowr Forest in
2020; the Company not submitting an evidence package to license the
first floor of the R&D Facility in the anticipated timeframe or
at all; the inability to complete construction of facilities in
Portugal in a timely fashion or at all; the inability to realize
revenue from the Company’s European operations within the
anticipated timeframe or at all; the Company being unable to
establish sales and distribution channels in Europe and Australia
to deliver medicinal cannabis to underserviced markets; the Company
not receiving EU-GMP certification within the anticipated timeframe
or at all; any failure to realize 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 in Europe within the anticipated
timeframe or at all; the Company being unable to realize
expectations for annual production and processing capacity at its
Sintra facility; the inability to complete a partial extraction and
processing facility at the Company’s Aljustrel facility; the
Aljustrel facility being unable to complete a phased ramp up of
production; the inability to harvest an initial crop at the
Company’s Aljustrel facility within the anticipated timeframe or at
all; the Company’s inability to realize expectations for harvests
at its Aljustrel facility in 2020; 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 become cash
flow positive within the anticipated timeframe or at all; 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 craftmanship and
product consistency; the construction and development of Holigen’s
and 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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