Conversion of Nevada's largest greenhouse now complete; first harvest imminent
TORONTO , May 30, 2019 /CNW/ - Flower One Holdings Inc. (FONE.CN) (FLOOF) ("Flower One" or the "Company") today reported its financial and operating results for the first quarter ended March 31, 2019 . All amounts are expressed in U.S. dollars unless indicated otherwise.
Year-to-date operational highlights:
- Completed the conversion of the Company's 400,000 square-foot greenhouse for large-scale hydroponic cannabis cultivation, with the cutting cells, vegetative zones and the eight flowering zones now fully canopied;
- Announced eight Brand Partnerships, including seven during the first quarter and one subsequent to quarter end;
- Obtained lease equipment financing for up to $30M on February 11, 2019 ; and,
- Raised CAN $57.5M through a prospectus offering of convertible debenture units that closed on March 28, 2019 .
"This is an important and exciting time for Flower One, its Brand Partners, and its investors," said Ken Villazor , President and CEO. "With the addition of eight Brand Partners so far in 2019, the completion of our greenhouse, the commencement of operations, and our first harvest now imminent, we have reached the inflection point we have been diligently, yet aggressively, working towards. As a result of our efforts, we are uniquely positioned to fulfil the large-scale cultivation, processing, production and high-volume packaging needs of brands wanting to accelerate their market entry into Nevada ."
First quarter financial results
The Company's operational activities during the quarter were primarily focused on advancing the conversion of its 455,000 square foot greenhouse and production facility for cultivating high-quality cannabis at scale. The conversion of the greenhouse was completed subsequent to the end of the first quarter.
Revenue for the quarter was $534,172 . There was no revenue in the first quarter of the prior year as Flower One only began recording revenue on November 9, 2018 subsequent to the acquisition of the assets of NLVO.
Cost of goods sold for the quarter was $491,757 and included production costs expensed and the cost of inventory sold.
The Company had net income of $1,668,786 for the quarter. During the quarter the Company recorded a fair value gain of $10,373,447 on the growth of biological assets, $71,840 in gains related to fair value adjustments on derivative liabilities, and $976,026 in gains related to the modification to the note payable on the acquisition of the greenhouse, and partially offset by $882,044 in share-based compensation, $2,594,603 in finance expenses, $323,321 in foreign exchange loss related to the Company's cash balances held in Canadian dollars and the derivative liabilities, $3,637,794 in general and administrative expenses, and tax expense of $2,142,182 mainly related to the fair value gain on the growth of biological assets.
As at March 31, 2019 , Flower One had working capital of $4,758,946 compared to a working capital deficit of $32,866,665 at December 31, 2018 .
Flower One's 2019 first quarter financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on May 30, 2019 and will be available on the same day on Flower One's website at www.flowerone.com/investors/financial-reports.
Notice of conference call
Management of Flower One will host a conference call at 8:30 a.m. ET on Friday , May 31, 2019 to review recent and upcoming milestones. You can join the call by dialing 647-427-7450 or 1-888-231-8191. Please dial 647-427-7450 or 1-888-231-8191 approximately 15 minutes prior to the call to secure a line. You will be put on hold until the conference call begins.
A live audio webcast of the call will be available at http://bit.ly/FONE2019Q1. 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. An archived replay of the webcast will be available for 90 days.
About Flower One Holdings Inc.
Flower One is sharply focused on quickly becoming the leading cannabis cultivator, producer and innovator in the highly lucrative Nevada market. Flower One owns and operates a 25,000 square-foot cultivation and production facility in North Las Vegas , with nine grow rooms, and owns the established NLV Organics consumer brand of cannabis products. The Company is also rapidly converting its 455,000 square-foot greenhouse and production facility, which is the largest in the State of Nevada , for cultivating and processing high-quality cannabis at scale. Combined, the flagship greenhouse facility and production facility (once fully operational) and the North Las Vegas facility provide Flower One with 480,000 square feet of capacity for cultivation and processing, production and high-volume packaging of dry flower, cannabis oils, concentrates and infused products. The Company is fully licensed for medical marijuana cultivation and production, as well as recreational marijuana cultivation and production in the state of Nevada and currently holds licensing agreements with their Brand Partners, Flyte Concentrates, Rapid-Dose Therapeutics' Quick Strip, Old Pal, Palms, HUXTON, CannAmerica Brands, Grenco Science (G Pen), and The Medicine Cabinet.
The Common Shares are traded on the Canadian Securities Exchange under the Company's symbol "FONE" and in the United States on the OTCQX Best Market under the symbol "FLOOF."
Cautionary note regarding forward-looking information
Statements in this press release that are not statements of historical or current fact constitute "forward looking information" within the meaning of Canadian securities laws and "forward looking statements" within the meaning of United States securities laws (collectively, "forward-looking statements"). Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of the Company to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "potential," "should," "may," "will," "plans," "continue" or other similar expressions to be uncertain and forward looking. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
Forward-looking statements may include, without limitation, statements relating to the Company's ability to imminently complete its first harvest at the Nevada's greenhouse, execution of the Company's strategy, new opportunities, and the potential capabilities of the cultivation, processing, production and packaging facility in Nevada .
The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational and medicinal cannabis marketplaces in the United States through its subsidiary Cana Nevada Corp. Local state laws where Cana Nevada Corp. operates permit such activities; however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in the Company's management discussion and analysis dated May 30, 2019 filed on its issuer profile on SEDAR at www.sedar.com.
Although Flower One has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on obtaining regulatory approvals; investing in target companies or projects that are engaged in activities currently considered illegal under United States federal law; changes in laws; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth and state adoption due to inconsistent public opinion and perception of the medical-use and adult-use marijuana industry and; regulatory or political change.
The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement, the "Forward-Looking Statements" section contained in the Company's most recent management's discussion and analysis ("MD&A"), which are available on SEDAR at www.sedar.com. All forward-looking statements in this press release are made as of the date of this press release. The Company does not undertake to update any such forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also subject generally to assumptions and risks and uncertainties that are described from time to time in the Company's public securities filings with the Canadian securities commissions, including the Company's most recent MD&A.
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR THEIR REGULATIONS SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE Flower One Holdings Inc.
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