Flower One Holdings Inc. (“Flower One” or the “Company”) (CSE: FONE) (OTCQX: FLOOF) (FSE: F11), the leading cannabis cultivator and producer in Nevada, is pleased to announce its financial and operating results for the third quarter ended September 30, 2021. All amounts are expressed in U.S. dollars unless indicated otherwise.
Third Quarter Highlights:
- The Company reported revenue of $14.1M, representing a 18% increase over the same period of the prior year;
- Announced the full-time appointments of Kellen O’Keefe as Chief Executive Officer and Salpy Boyajian as Executive Vice President;
- Closed its above-market non-brokered private placement, raising gross proceeds of $5M;
- Announced an exclusive brand partnership with Miss Grass, a brand that serves as an innovative platform focused on cannabis education, culture and science;
- Appointed Nikki Brown as the first member of the Company’s Advisory Board;
- Announced a strategic brand partnership with ALTWELL, a leading California health and wellness cannabinoid-based brand.
“While we continued to see the positive impacts of the restructuring and operational advancements, we also experienced seasonal challenges related to our production, highlighting the need for several key improvements required to bring the facility to optimization and ultimately full capacity. We have begun the first phase of significant upgrades to the facility, which will further improve the quality and consistency of our product, and ultimately increase yield and total capacity,” said Kellen O’Keefe, Flower One’s President & Chief Executive Officer. “We are focused on implementing these improvements as quickly as possible, to ensure we are able to reduce the impact of seasonal challenges moving forward and to position us for a strong 2022 and beyond.”
Third Quarter 2021 Financial Results:
Revenues
For the three-month period ending September 30, 2021, the Company reported revenue of $14.1M, up 18% from third quarter 2020 revenues of $11.9M.
Expenses
The following contains certain adjustments to the third quarter numbers to properly reflect the year-to-date figures. As a result of the adjustments, the reported cost of sales for third quarter 2021 was $14.8M. Cost of sales for the nine-month period ending September 2021 was $33.5M, resulting in a gross margin of 27%.
Profitability Measures
For the nine-month period ending September 2021, gross profit was $15.2M, compared to a gross loss of $14.6M in the nine-month period ending September 2020. Cost of sales and gross profit both include various noncash charges related to changes in fair value adjustments of biological assets and inventory, both of which reflect year-to-year variances in cultivation, harvesting times and yields. The following chart contains certain adjustments to the third quarter numbers to properly reflect the year-to-date figures.
Balance Sheet
As of September 30, 2021, the Company had cash and cash equivalents of $4.9M, compared with $2.2M as of June 30, 2021, and $1.1M as of December 31, 2020. Total liabilities as of September 30, 2021 was $120M, compared to June 30, 2021 of $131.7M, and December 31, 2020 of $142.1M. While Flower One’s financial results are still affected by the ongoing restructuring and its associated fees and legacy costs, Flower One’s Board and Management team have taken decisive steps over the past quarter to further position the Company for long term success and to drive value for shareholders.
“While I have only been with the Company for a short time, I am pleased with the caliber of the team we have assembled and the improvements we have already implemented,” said Araxie Grant, Flower One’s Chief Financial Officer. “We can assure you that we are taking all of the necessary steps to achieve positive cash flow as quickly as possible. We will continue to explore all options with regards to decreasing the Company’s cost of capital and operating expenses.”
Flower One’s third quarter 2021 financial statements and management’s discussion and analysis will be issued and filed on SEDAR at www.sedar.com on November 29, 2021, and will be available on Flower One’s website at www.flowerone.com/investors/financial-reports.
Subsequent Events:
Executive Appointments:
The Company recently announced the hiring of Araxie Grant as the Company’s Chief Financial Officer. Ms. Grant brings almost two decades of finance and accounting experience over diverse industries including professional sports, gaming, entertainment and non-profits. Most recently, Ms. Grant was the Vice President Controller for the Las Vegas Raiders football team, the Chief Financial Officer to the Arena Football League and previously a key financial executive at Las Vegas Sands Corporation, where she spent seven years building the company’s finance department. Ms. Grant holds a Master’s in Accounting degree from the University of Nevada.
Brand Partnerships:
In October, the Company announced a partnership with Justin Bieber and current brand partner, Palms, to launch the limited-edition PEACHES pre-rolls which can be found at Planet 13, MedMen, Cookies and other select dispensaries. Through the partnership, Flower One became the exclusive producer of Palms “PEACHES” line in the state of Nevada.
Notice of Conference Call:
Management will host a conference call at 10:00 a.m. ET on November 30, 2021, to discuss its financial results.
Date: Tuesday, November 30, 2021
Time: 10:00 a.m. ET
Call: 1-877-407-0789 (Canada and US) or 1-201-689-8562 (International)
Conference ID: 13724959
Webcast: A live webcast will be available on Flower One’s website or at ViaVid.
All interested parties are invited to participate. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.
For those unable to join the live webcast, a replay will be available until 11:59 p.m. ET on Thursday, November 29, 2022. To access the archived webcast, please visit Flower One’s website.
