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 2020:

• 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 quarter:

• 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 transaction.

FOURTH QUARTER AND FULL YEAR 2020 RESULTS

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

*


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.

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 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 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:


Lance Emanuel


President and Interim CEO

CONTACT INFORMATION:

INVESTORS & MEDIA:

Irina Hossu

Chief Financial Officer


[email protected]

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.