Flower One Archives - Green Market Report

Debra BorchardtJune 28, 2021
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4min7500

Flower One Holdings Inc. (CSE: FONE) (OTCQX: FLOOF) released its financial and operating results for the first quarter ending March 31, 2021, with revenue rising 53% to $13.9 million over last year’s $8.8 million. This topped the previous guidance from Flower One of $13.5 million and was a big jump sequentially over the fourth quarter’s $9.7 million. Flower One reported an income from operations of $3.8 million and a net loss of $10.6 million. The company said the net loss resulted from $9.5 million of finance expenses, fair value losses on derivatives, losses on note modifications, and foreign exchange losses.

“In the first quarter of 2021 we reported the best performance in the history of the Company, as the impact of the restructuring and operational improvements began to show results,” said Kellen O’Keefe, Flower One’s President & Interim CEO. “With the new board of directors and management in place, we have taken the first steps towards positioning Flower One for long-term success. We are focused on the financial discipline and operational excellence required to meet or exceed projections and achieve cash flow positivity. We believe we are closer than ever to meeting these objectives, as we continue to capitalize on the return of tourism in Nevada. Over the past several months, we have improved the quality of cannabis that comes out of our facility, which has enabled us to generate a significantly higher average price per pound. Our commitment to quality has been very well received by the market, allowing us to gain nearly 25% share of the wholesale market and become the largest producer of cannabis in Nevada.”

Balance Sheet Improvements

Beginning in January, Flower One underwent a complete restructuring transaction of its debt, which was completed in the second quarter of 2021. The successful debt restructuring, net proceeds from the convertible debenture financing and improved operating results enabled it to significantly improve its liquidity position by the quarter-end. General and administrative expenses for the quarter totaled $7.4 million (which included approximately $1.5 million of one-time/non-recurring expenses associated with the corporate restructure) vs. $6.2 million during the first quarter of 2020 and $8.2 million during the fourth quarter of 2020. This improvement resulted from the new management’s focus on cost rationalization, offset partially by higher cannabis taxes related to higher sales.

“Due to the corporate restructure-related debt reductions and uses of proceeds from the January and March financings to reduce payables and other obligations, the Company’s liquidity position improved significantly. Given performance to date in Q2 and the April restructure of our Canadian Debentures, we expect further improvements as we continue to scale up and reduce costs,” noted Richard Groberg, Flower One’s Interim CFO.

Second Quarter Guidance

Flower One gave its second-quarter 2021 preliminary unaudited revenue guidance of $16-$18 million.  Groberg said, “Given that new management didn’t assume full control until the end of January 2021, these results did not reflect the full impact of the new management’s strategies in terms of product allocation, pricing, product yield, cost of cultivation, harvesting, and production. Looking ahead, we will continue to automate production at our facilities, where possible, which will enhance our ability to produce more at a lower all-in cost per gram. While first-quarter 2021 was a record quarter, we expect our financial performance to continue to improve and for growth to accelerate throughout the remainder of the year, as reflected in our preliminary second-quarter 2021 guidance.”


StaffMay 10, 2021
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4min11430

Flower One Holdings Inc. (OTCQX: FLOOF) announced unaudited preliminary first-quarter revenue guidance of $13.5 million. Flower One said that it expects to announce the date for its filing of the fiscal 2020 year and first quarter 2021 in the coming weeks.

The company hasn’t reported results since the third quarter ending in September 2020 when revenues were $11.9 million.

“We are extremely proud of our team and the tremendous collaborative effort put forth by so many to successfully restructure Flower One and become the top producer in Nevada,” said Kellen O’Keefe, Flower One’s President and Interim CEO. “For us to have accomplished what we have under the circumstances was nothing short of remarkable and something our entire team can be very proud of. As a company, we have never been in a stronger position and will emerge from the pandemic a different company on an entirely new trajectory. We continue to break records month after month, ending April with all-time high monthly sales and the highest average selling price per pound in our company’s history. We are extremely well-positioned for future growth as Vegas comes back online; and, we welcome the first Cookies store to the strip this week.”

Flower One also reported that as of March 2021, it is the top flower provider in the state of Nevada, recognizing both the number one (Cookies) and number two (NLVO, the Company’s in-house brand) as top-selling flower brands in the state. The company said that in addition to holding the two top-selling flower brands, it is also the leading producer of distillate, bulk, and white label flower sales in the state of Nevada.

Other highlights in the company’s statement included:

  • The Company’s yielding cultivation analytics are reported up to 135.7 grams per plant through the first quarter of 2021, at an average cost per gram of USD$0.58. The Company has historically has reported its average cost per gram to be between USD$0.40-0.69;
  • Through updates to its post-harvesting process (drying, curing, trimming and packaging), the Company has recognized over 300% growth in its processing capacity in the first quarter of 2021, in comparison to the fourth quarter of 2020.

Debt Restructuring/ New CEO

In April, the company announced that it converted 60% of the principal amount of the Debentures for units comprised of one common share and ⅚ of a warrant- resulting in the total principal amount of the 9.5% unsecured debentures due March 28, 2022, being reduced from C$42,471,000 to C$16,988,400; and, the total principal amount of the 9.5% unsecured convertible debentures due November 15, 2022, being reduced from C$9,276,000 to C$3,710,400. The company had defaulted on payments such as $262,500 due on January 1, 2021 in connection with a loan from RB Loan Portfolio I, LLC  and lease payments in the amount of $526,677 due on January 5, 2021 in connection with the company’s lease of the greenhouse facility located at 3950 North Bruce Street in North Las Vegas.

In January Kellen O’Keefe was appointed from his previous position of Chief Strategy Officer to Flower One’s President and Interim Chief Executive Officer.


Debra BorchardtJanuary 27, 2021
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6min10480

Flower One Holdings Inc.  (OTCQX: FLOOF) completed an initial debt restructuring, closed on $10 million of a non-brokered convertible debenture offering that could rise to $25 million, and made changes to its Board of Directors and executive management team. The company recently defaulted on payments such as $262,500 due on January 1, 2021 in connection with a loan from RB Loan Portfolio I, LLC  and lease payments in the amount of $526,677 due on January 5, 2021 in connection with the company’s lease of the greenhouse facility located at 3950 North Bruce Street in North Las Vegas.

Flower One had also not paid the January lease payment of $248,268 in connection with the lease of its cultivation and production facility at 343 Neeham Road in North Las Vegas, and interest payments due on two other loans (totaling $152,306 and $27,575), all of which were due January 1, 2021.

“Coupled with the Board and Management changes, the combination of the cash infusion, debt conversions, and debt and lease restructurings better positions the company’s Balance Sheet and debt service obligation,” said Interim CFO Richard Groberg. “With these steps, as well as recent cost rationalizations, Flower One has more flexibility to further its evolving cultivation, production, and sales strategies to serve the expanding Nevada market for cannabis consumption.”

New CEO

Kellen O’Keefe has been appointed from his previous position of Chief Strategy Officer to Flower One’s President and Interim Chief Executive Officer. Ken Villazor stepped down as Flower One’s Chief Executive Officer, President, and Chairman of the Board, positions he has held since January 1, 2018. Salpy Boyajian has been appointed as Executive Vice President, from her previous position of COO of Nevada Operations, and also has been appointed as Chairman of the Board.

“Today marks a transformational moment in Flower One’s history as we welcome prominent, industry-leaders to our Board of Directors as well as further strengthening our management team,” said O’Keefe. “We have taken the first steps towards properly capitalizing the business, restructuring our debt, and better positioning the Company for long-term success. We are excited about the future for cannabis in Nevada and are committed to our promise to deliver exceptional quality cannabis at accessible prices.”

Debt Restructuring

Flower One reached a modification agreement with its secured lender, RB Loan Portfolio II with respect to its existing $30 million term debt and with RB Loan Portfolio 1, LP, for an existing $16.9 million equipment financing. The company extended the maturity date from June 27, 2021, to December 21, 2021, and modified the interest rate to 14%, with 12% paid monthly and 2% paid at maturity, and the addition of an “Exit Fee” of $1 million payable upon payment in full of the Term Loan on the Maturity Date. Certain conditions were placed on the loan modification and the company listed them as follows:

  • the requirement that the Company pay certain previously defaulted obligations
  • that the Company complete of at least the Initial New Equity and the Subsequent New Equity by March 5, 2021
  • a Loan Modification Fee equal to 3% per annum on the outstanding principal of the Term Loan from May 19, 2020 until the “Effective Date” of the Term Loan Modification (January 25, 2021)
  • Flower One common shares in an amount equal to US$1,200,000 (with such common shares is subject to a six month lock-up agreement)
  • the grant of one-half warrant for each share granted, such warrants being exercisable for three years at a price of C$0.31, and reimbursement of Lender expenses

The company also entered into a Lease Modification Agreement with regard to the Master Lease Agreement dated February 1, 2019, for equipment lease financing of certain equipment at the Bruce St. Facility, pursuant to which the Lessor has agreed to forbear existing events of default and make certain modifications to Master Lease. The company was able to reduce the monthly payments. In connection with the Loan Modification Agreement, the company has issued US$1,200,000 worth of equity units.

Flower One closed on $10 million of a non-brokered Convertible Debenture Offering of up to $25 million “Debenture Units”. The company said expects to close the second tranche of the Offering at or about the end of February 2021. The net proceeds are intended to be used for working capital, previous debt obligations, and general corporate purposes. In connection with the initial closing under the offering, the company issued a total of 12,824 Debenture Units at a price of C$1,000 per Debenture Unit.

New Board Members

New additions to the Board include Mitchell Kahn, Eliza Gairard, and Kellen O’Keefe, effective January 26, 2021. Mr. Kahn, Mrs. Gairard, and Mr. O’Keefe will join the Board in addition to current Directors, Salpy Boyajian and Nitin Kaushal. Nitin Kaushal, who was recently appointed to the board, will serve as the Chair of the Company’s Audit, Risk and Finance Committee. Effective January 26, 2021, Amit Varma, David Wesley, and Ken Villazor have stepped down from the Board.


Debra BorchardtOctober 13, 2020
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4min14640

Flower One Holdings Inc. (CSE: FONE) (OTCQX: FLOOF) announced preliminary third-quarter revenue of $11.5 million surpassing its Q3 2020 revenue guidance range of $9.8 million and $10.8 million. The company did not state whether it had any profits or net losses. Flower One said it continues to expect its third-quarter gross margin to be in line with its previous guidance of 30-35%.

“These past few months have demonstrated Flower One’s resilience and ability to reemerge through COVID-19 with momentum as evidenced by our strong, preliminary quarterly revenue,” said Ken Villazor, President and Chief Executive Officer of Flower One. “The Company continues to increase its market penetration by providing our retail partners with a consistent supply of some of the highest-quality products and premium brands available in the Nevada market.”

In addition to the third-quarter figures, Flower One said that its year-to-date gross sales, thru the month ending September, were roughly $24.2 million. The company also noted that its initial launch of Cookies and 22 Red demonstrated its ability and ongoing priority to transition its product revenue mix towards premium quality and higher gross margin sales. Kiva’s Blackberry Blitz Game On Camino gummies were also launched as a nod to the Las Vegas Raider’s inaugural season in Nevada.

$39 Million Loan

Last week the company announced that it has entered into a term debt loan agreement for $39 million with Subversive Real Estate Acquisition REIT LP. As part of the Loan Agreement, Flower One granted Subversive REIT a two-year option to pursue a sale-leaseback transaction to purchase Flower One’s 455,000 square-foot cannabis cultivation and production facility in North Las Vegas, Nevada for up to $80 million, and subsequently lease it back to the company. Proceeds of the loan will be used to replace an existing $30 million term loan that would have been due in June 2021, as well as to fund general corporate purposes and other Company debt obligations.

“Subversive REIT is positioned to be a leader in the U.S. cannabis real estate market,” said Ken Villazor, President and Chief Executive Officer of Flower One. “We are excited to have this opportunity to build a strategic partnership with such a deeply connected and highly-knowledgeable cannabis real estate partner that is poised to benefit Flower One both in the near- and long-term as we continue to enhance our operations in Nevada.”

Following the end of the quarter Flower One said that it has taken the following actions:

  • The implementation of brand partner Lift Ticket’s proprietary pre-roll technology and processes;
  • The signing of Nature’s Lab, an award-winning concentrate producer, as both a brand partner and SOP consultant to further increase and accelerate both quality and capabilities of Flower One’s production lab; and
  • The launch of previously announced brand partner Heavy Hitters with the shipment of the first order to retail.

 


Debra BorchardtMay 4, 2020
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4min12590

While other cannabis companies have complained of a tight capital environment, Nevada-based Flower One Holdings Inc.  OTC:FLOOF has successfully closed its previously announced non-brokered private placement. The company said it raised C$10.9 million or $7.8 million. This is higher than the previously planned offering of $7.5 million. Flower One said it plans to use the proceeds for general corporate and working capital purposes.

“This Private Placement garnered strong demand from existing shareholders as well as new, strategic investors from multiple countries and signifies an expansion of our capital markets profile internationally,” said Ken Villazor, President and CEO of Flower One. “The high level of interest in our offering truly speaks to our differentiated market strategy and proven ability to execute and scale our operations to become a market leader in the U.S. cannabis industry.”

Flower One is the largest cannabis cultivator, producer, and full-service brand fulfillment partner in the state of Nevada. Flower One’s flagship 400,000 square-foot greenhouse and 55,000 square-foot production facility is used for large scale cannabis cultivation, processing, and manufacturing. Flower One also owns and operates a second production facility in Las Vegas, with 25,000 square feet of indoor cultivation and a commercial kitchen that will produce several of the nation’s top-performing edible brands.

Flower One produces a wide range of products ranging from wholesale flower, full-spectrum oils, and distillates to finished consumer packaged goods including flower, pre-rolls, concentrates, edibles, and topicals for the top-performing brands in cannabis.

Deal Terms

In connection with the Private Placement, Flower One issued a total of 29,599,025 units comprised of one common share in the capital of the company and one-half common share purchase warrant.

Preliminary Earnings

Last month, the company announced its preliminary unaudited first-quarter revenues with for 2020 of $8.9 million, near the mid-point of the company’s guidance range of $8 million to $10 million. March 2020 cannabis sales of $3.9 million, the company’s highest recorded monthly sales to date, and a sequential increase of 47% compared to February 2020.

The company still has not formally filed its 2019 and fourth-quarter 2019 earnings. Flower One said it expects to file the Annual Filings after market close on May 7, 2020. Flower One will also host a conference call on May 8, 2020, at 8:30 a.m. ET to discuss its financial results and review recent and upcoming milestones.

“Since our first sales of product out of our flagship greenhouse in the third quarter of 2019, Flower One has consistently delivered month-over-month growth,” said Ken Villazor, Flower One’s President and Chief Executive Officer. “We are pleased to see this sales momentum and are proud to be able to continue to support our brand and retail partners during these challenging times. Over the next two quarters, we expect to launch several leading cannabis brands and products into the market that we anticipate will be catalysts for further revenue growth for our Company, including product launches for The Clear, Old Pal, Heavy Hitters, and Cookies.”


StaffNovember 27, 2019

4min14610

Flower One

Flower One Holdings Inc. (CSE: FONE) (OTCQX: FLOOF) reported that its third-quarter revenue was $2.5 million, with sequential quarterly growth of 292% and representing seven weeks of sales from the greenhouse. The company also reported that net income totaled $15.7 million,  which was mainly driven by the gain on the growth of biological assets of $18.4 million and a gain on the fair value of derivatives of $9.7 million.

“This was another milestone quarter for Flower One as, among other things, it was the first reporting period that included revenue contributions from our flagship greenhouse,” said President and Chief Executive Officer, Ken Villazor. “During the quarter, we completed and fully commissioned our 55,000 square foot production facility and welcomed three additional industry-leading brand partners to our growing portfolio. Our greenhouse and production facilities are now fully operational and yielding industry-leading analytics. This, combined with securing 15 brand partnerships, was accomplished within 19 months and places us in an exciting and truly unique path to profitability and positive cash flow in the first half of 2020.”

Flower One has made a big splash since its brand Old Pal became the leading flower brand in the state of Nevada within its first three months of sales. Old Pal and NLVO are among the top ten selling flower brands in Nevada.

Flower One said in a statement that it has now completed 15 harvests, which on average have produced a cultivation yield of 32 grams per square foot at an average harvested cash cost of $0.44 per gram. Flower One’s dry cannabis is now transitioned daily to its 55,000 square-foot production facility to generate a wide variety of the most in-demand cannabis products and brands from across the United States. The production facility currently consumes 3,000 to 5,000 pounds of biomass per week. In the last two months, the production lab has also begun producing an extensive product library of high-quality concentrates including shatter, batter, cookie crumble, wax/budder, THCA diamonds, THCA sugar and LPG high terpene sauces.  The company’s first lots of concentrates will enter the market this quarter.

Cannara Biotech

Cannara Biotech Inc.  (CSE: LOVE) (OTCQB: LOVFF) has not yet generated cannabis-related revenues from its Canadian operations and is still in progress of completing the construction of Phase 1 of the Farnham Facility which is required to obtain the License. Still, it has funded ShopCBD.com Inc. with an $8 million private placement to support the launch of the online e-commerce platform for the sale and distribution, in the US, of hemp-based CBD products. It has over $26 million of available cash. The company reported net loss of $3,810,875 for the year ended August 31, 2019

 


William SumnerSeptember 18, 2019
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It’s time for your Daily Hit of cannabis financial news for September 18, 2019.

On the Site

Overcoming Canada’s Cannabis Shortage

Shortages of Canadian marijuana appeared immediately after recreational sales of cannabis starting from October 2018.  Hence, there is a typical Canadian refrain almost lately.  Because of little inventory remaining, many stores are closed three days a week, and provincial distributors are blaming federal regulations and producers. Some of the giant retailer’s licenses have also frozen and some are limited to 25 stores on the state level.

Supreme Cannabis

The Supreme Cannabis Company, Inc. (FIRE.TO) (SPRWF) reported net revenue of $19 million for the fourth quarter ending June 30, 2019, a 90% increase sequentially. The net loss for the quarter was $421,000. Supreme Cannabis’ core recreational flower brand, 7ACRES, accounted for the company’s marked increase in revenue, growing 443% year-over-year from $3.5 million in Q4 2018 to $19 million in Q4 2019.

In Other News

CannTrust

In a blow to the beleaguered company, CannTrust Holdings Inc. (TSX: TRST) (NYSE: CTST) announced that is has received a Notice of Licence Suspension under section 64(1) of the Cannabis Act, citing noncompliance. The notice is a partial suspension for the company’s license for cultivation and a full suspension of its license for standard processing, medical sales, cannabis drugs and research. CannTrust will still be able to cultivate and harvest existing lots or batches previously propagated, as well as the ancillary such as drying, trimming, and milling. Health Canada will reinstate CannTrust’s license if the reasons for the suspension no longer exist or if CannTrust demonstrates that the suspension was unfounded.

Flower One

Flower One Holdings Inc. (CSE: FONE) (OTCQX: FLOOF) has entered a sale-leaseback agreement with Treehouse Real Estate Investment Trust, Inc. for the company’s 25,000 square-foot indoor cultivation and production facility in North Las Vegas, including the adjacent vacant lot. The company is planning to build a commercial kitchen and manufacturing space on the property. Construction is expected to begin by the second quarter of 2020. Treehouse will purchase the property for $20 million. “Flower One is thrilled to form a long-term partnership with Treehouse, enabling us to access significant capital to continue our expansion in Nevada and potentially beyond,” said Kellen O’Keefe, Chief Strategy Officer at Flower One. “Flower One is actively pursuing multi-state opportunities and plans to utilize its partnership with Treehouse in order to do so.”


StaffJanuary 29, 2019
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6min10750

It’s time for your Daily Hit of cannabis financial news for January 29, 2019.

On The Site

Sproutly

Sproutly Canada, Inc. (OTCQB: SRUTF)  announced financial results for the three and nine months ended November 30, 2018. The company reported a net loss of C$2.8 million or $0.02 per diluted share for the quarter versus last year’s net loss of C$473,405 for the same time period. The company also delivered a $9.5 million net loss for the nine months ending November 30.

In the filing, Sproutly noted that it has not generated any revenues from operations and has incurred losses since inception. The company has an accumulative deficit of $12,312,832 and negative cash flows from operating activities for the period from January 17, 2017 to November 30, 2018. To date, the company’s activities have been funded through financing activities.

New Mexico

The New Mexico Medical Cannabis Program racked up $106 million in sales in 2018 for a 23% increase over 2017. Patient enrollment grew by 45% from 2017 to 2018 and now counts 67,574 patients in the system. It’s easy to see an imbalance here. The patient count grew faster than sales.

The largest provider in the system Ultra Health said that the problem is plant count limits combined with regulatory hurdles. The company was the largest provider in the state with a market share of 15.4% in 2018 and reporting $16 million in revenue for the year.

In Other News

Valens GroWorks Corp. (OTC: VGWCF)  announced that it has entered into a multi-year extraction services agreement with Organigram Inc. (OTC: OGRMF) for cannabis and hemp extraction services. Valens will extract cannabis flowers and trim from Organigram’s Moncton operation as well as hemp to produce extract concentrate. In turn, the concentrate will be used by Organigram to produce oils and, eventually, derivative edible and vaporizable cannabis products. The legalization of cannabis edibles and other derivative based products in Canada is expected later this year. In addition, under the terms of the Agreement, Valens will also provide lab services for Organigram as needed.

Alternate Health Corp.(OTCQB: AHGIF) has done a non-brokered private placement of unsecured convertible notes under prospectus exemptions available under applicable securities legislation in the aggregate principal amount of up to C$12,000,000 ($9,000,000), maturing and payable on the date that is three years from the date of issuance. The private placement proceeds will assist in funding Alternate Health’s expansion into California’s adult-use cannabis industry, including key acquisitions. With licensed facilities in Los Angeles and Humboldt County, Alternate Health is actively marketing the Company’s software to leading players in the industry. In addition to funding expansion opportunities in product distribution and CBD marketing, private placement proceeds will be used in Alternate Health’s CanaPass business and for general working capital purposes.

Flower One Holdings Inc.  (OTCQB: FLOOF)  announced a new licensing agreement and Brand Partnership for cannabis-product fulfillment in Nevada. HUXTON is an Arizona-based lifestyle cannabis brand known for their curated, consistent, multi-strain blended products. Flower One is now licensed to manufacture, distribute and sell HUXTON’s signature cannabis products to all cannabis retailers in Nevada.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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