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Share Name | Share Symbol | Market | Type |
---|---|---|---|
IM Cannabis Corporation | NASDAQ:IMCC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.015 | -1.86% | 0.79 | 0.77 | 0.79 | 0.819899 | 0.76 | 0.7652 | 251,973 | 00:53:11 |
Tom Flow, Interim Chief Executive Officer of Flowr commented:
“2021 was a pivotal year for Flowr as we renewed our focus on maintaining our status as a premium cannabis producer and making the necessary changes to our business operations to reach profitability. The Company made significant progress towards this objective, as we continue to take the necessary steps to reduce costs and drive revenues. In Q4 2021, we achieved new records in gross and net revenue at $4.4 million and $3.9 million, respectively, contributed by our previously announced strategy of introducing exciting new genetics and formats, enhancing our retail penetration, and solidifying our world class operations out of the K1 facility.
Operationally, the K1 facility has been now fully operational since the second half of 2021 and each grow room is being utilized to ensure our fixed costs are being spread out over a higher number of production grams. We have increased our product offerings significantly with the launch and success of Strawnana, Sour Sis, BC Dog Walkers, and in 2022 introduced several new exciting strains including BC Clementine Crush, BC Lemon Ice, BC Spiced Grape and BC Mango Melon OG, with more planned for the rest of 2022. We have also seen significant growth in retail penetration across our core markets with store distribution well over 50%.
Financially, we have strived to improve our financial position by reducing costs, shedding non-core assets and licenses, significantly reducing overall indebtedness, and raising additional equity capital. The sale of the KRS R&D facility and Holigen as previously announced will further reduce the Company’s indebtedness to approximately $10 million, including $5.7 million under the senior credit facility and $5 million of convertible debentures, with further paydowns to the senior credit facility expected in the second quarter. The Company has reduced SG&A expenses each quarter since the end of 2020 with Q4 2021 SG&A 16% lower than the same period in 2020.
As previously announced, we have closed the sale of Holigen for what we believe to be favourable terms for Flowr shareholders. The Company undertook a robust sale process and was able to transact upon a deal that gave Flowr a significant amount of cash on closing to solidify its balance sheet and also preserve the upside related to our European operations. We still believe the European market is on the cusp of regulatory change and we believe that Holigen will be able to take advantage of those opportunities with the capital and excellent management team from Akanda.
Although we did not reach our full objectives for 2021, we are encouraged by the positive steps we have taken to position Flowr in 2022. Through the various changes that have been implemented, we believe Flowr is in a better position to realize its full potential and deliver results. The next few quarters will be an exciting time for Flowr as the Company takes the last steps towards profitability.”
SELECTED FINANCIAL AND OPERATIONAL RESULTS
The following table summarizes the Company’s key financial and operational results:
In thousands of CAD dollars, | Three months ended | Year ended | |||||||||||||||||||
(except loss per share and grams harvested) | December 31, | December 31, | |||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||
Grams harvested - K1 | 1,270,027 | 1,195,260 | 4,278,407 | 4,336,240 | |||||||||||||||||
Grams sold | 1,406,904 | 311,308 | 6,627,052 | 1,405,495 | |||||||||||||||||
Gross revenue | 4,292 | 2,066 | 14,877 | 9,441 | |||||||||||||||||
Net revenue(1) | 3,801 | 1,600 | 12,348 | 7,513 | |||||||||||||||||
Cost of sales | 5,262 | 2,904 | 22,064 | 11,468 | |||||||||||||||||
Impairment of inventory | 1,515 | 842 | 2,394 | 3,517 | |||||||||||||||||
Gross loss before fair value adjustments | (2,976 | ) | (2,146 | ) | (12,110 | ) | (7,472 | ) | |||||||||||||
Selling and marketing and G&A | 3,900 | 4,614 | 16,327 | 18,613 | |||||||||||||||||
Share-based compensation | 631 | 396 | (83 | ) | 3,020 | ||||||||||||||||
Transaction costs | — | 917 | — | 917 | |||||||||||||||||
Restructuring costs | — | — | — | 726 | |||||||||||||||||
Impairment of assets | 57,096 | 83,979 | 57,096 | 83,979 | |||||||||||||||||
Loss from disposal of subsidiary | (909 | ) | — | 241 | — | ||||||||||||||||
Net loss | (63,859 | ) | (99,750 | ) | (89,234 | ) | (127,855 | ) | |||||||||||||
Adjusted EBITDA | (5,154 | ) | (5,383 | ) | (20,058 | ) | (18,670 | ) | |||||||||||||
Basic and diluted loss per share | (0.15 | ) | (0.07 | ) | (0.23 | ) | (0.95 | ) |
(1) Gross revenue net of excise tax, provision for returns and concessions.
Financial Results (presented in $000s)
Operational Updates
Key Events Subsequent to December 31, 2021
Pursuant to the terms of the Purchase Agreement, the Company has agreed to sell HL to the Purchaser for total consideration payable of approximately $35 million (the “Purchase Price”) consisting of: (i) $3,750,000 in cash; (ii) 1,900,000 common shares in the capital of Akanda (the “Consideration Shares”) which closed at U.S.$10.30 per share on April 19, 2022; (iii) the indirect assumption by Akanda of RPK’s indebtedness of approximately $5.1 million; and (iv) at least $0.8 million of interim funding to Holigen which has already been received by Flowr. If the Purchase Agreement does not close on or prior to May 31, 2022, the interim funding will be repaid to Akanda by the delivery of medical cannabis from Holigen at a price of €2.00 ($2.72) per gram or in cash, at the discretion of Flowr. In connection with the Transaction, Holigen will pay an advisory fee equal to 7% of the Purchase Price, 50% of which is payable in cash and 50% of which is payable in Consideration Shares.
In addition, Akanda agreed to subscribe for $1 million of common shares in the capital of Flowr (the “Private Placement”) at a price per share of $0.07 per share. The Consideration Shares are subject to a customary six-month lockup.
The Holigen Sale closed on April 29, 2022 upon receiving the necessary approvals and satisfaction of other closing conditions.
Adjusted EBITDA (Non-IFRS Measure)
Adjusted EBITDA is defined as net loss, plus (minus) income taxes (recovery), plus (minus) interest income (expense) including finance costs, plus depreciation and amortization, plus share-based compensation, plus (minus) non-cash fair value adjustments on biological assets and inventory sold, plus restructuring and transaction costs, plus (minus) loss (gain) on investments, plus impairment charges, and plus (minus) unusual or non-recurring items. 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 year ended December 31, 2021, please refer to the Company’s Management’s Discussion & Analysis and Consolidated Financial Statements for the year ended December 31, 2021, which have been filed on SEDAR.
About The Flowr Corporation
The Flowr Corporation is a Canadian cannabis company with operations in Canada and the European Union. Its Canadian operating campus, located in Kelowna, British Columbia. 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:
Tom FlowInterim Chief Executive Officer
CONTACT INFORMATION:
INVESTORS & MEDIA:investors@flowrcorp.com
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 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.
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