Adam JacksonNovember 29, 2022
Canadian company said runway is too short to make it to the end of the quarter.
The Flowr Corp. Archives - Green Market Report
Adam JacksonNovember 29, 2022
Jenel Stelton-HoltmeierOctober 21, 2022
It’s been a rough news week for the cannabis industry. Two separate Canadian producers (The Flowr Corp. and Flower One) filed for creditor protection from the courts, and a cannabis information and education website cut more than one-fifth of its staff.
On top of that, long-beleaguered company CannTrust said it was making a proposal to creditors that could result in the company fully dissolving by the end of November.
But it’s also a cautionary tale for other companies who have been chasing growth at all costs, expecting the revenue to eventually cover all the costs. You have a business to run, so make sure you’re running it like a business.
Here are some expert tips on things you can do today to improve the health of your company tomorrow:
- Make sure you’re keeping accurate and complete records of all aspects of your business operations. “If you can’t prove something in writing, it might as well not exist,” cannabis accountant Zach Gordon recently told KayaPush. It might sound tedious, but it’s up to you to keep track of where all the dollars and cents are going in your company to make sure you can continue to meet your obligations. This is particularly important for publicly traded companies.
- Don’t overextend your business too much. Raising capital via debt transactions has become more popular as more institutions have become more willing to provide loans to cannabis companies. According to Viridian Capital Advisors, debt accounted for 93% of all capital raised in cannabis through Oct. 14. But that money has risks that equity raises don’t – in particular, a repayment schedule. If you’re not careful, that monthly obligation can be steep. For example, High Times found itself owing $100,000 every month; this week, the cannabis brand this week announced it had entered into a settlement agreement with the lender after it defaulted on the obligation.
- Don’t wait until it’s too late to change. It’s tempting to try and hold out for the better days you “know” are coming, but if you wait until the tough times to adjust your operations, you might find yourself in a position where you have to cut so deep it can be near impossible to recover. Flowr cut roughly 40% of its staff earlier this year (alongside divesting noncore operations), but the savings didn’t amount to enough to help it avoid bankruptcy. You can be hopeful, but always look at the finances with a cautious lens and position your company so that it can be nimble when things aren’t rosy.
These tips aren’t magic bullets; they won’t solve all the challenges of operating a cannabis company. But they offer a great place to start to make sure your financial house is in order.
StaffOctober 20, 2022
The Daily Hit is a recap of cannabis business news for Oct. 20, 2022.
ON THE SITE
High Times Owes ExWorks $28.8 Million
High Times Holding Corp. filed an update with the Securities & Exchange Commission on Oct. 19 that it is in default on its loan to ExWorks for $28.8 million. In 2017, High Times Holding Corp. took out a loan to acquire Trans-High Corporation (THC), which was the original corporate name for the magazine. The filing stated, “All of our obligations to ExWorks are currently in default.” Read more here.
The Flowr Corp. Seeks Creditor Protection from Canadian Court
Toronto-based The Flowr Corp., (TSX.V: FLWR) (OTC: FLWPF), announced Thursday that the company and its subsidiaries plan to seek an order for creditor protection from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA). Such a filing is similar to a company in the U.S. seeking Chapter 11 bankruptcy protection. Read more here.
SPAC Announces Plan to Acquire New Mexico Cannabis Company
BGP Acquisition Corp. (NEO: BGP.U) (OTCQX: BGPPF) (OTCQX: BGPAF), a special purpose acquisition company based in British Columbia, has agreed to acquire Craft 1861 Global Inc. The deal is expected to close in the fourth quarter. Read more here.
Leaked Document Hints at Adult-Use Cannabis Legalization in Germany
Germany might be moving closer to legalized adult-use cannabis, according to a leaked report that lays out a proposed framework for such an industry. The document, obtained by RedaktionsNetwerk Deutschland (RND), reportedly includes recommendations from Germany’s Health Minister Karl Lauterbach on how such an industry should be structured. Read more here.
CENTR Brands Corp.
CENTR Brands Corp. (CSE: CNTR) (FSE: 303) (OTCQB: CNTRF), a producer of functional wellness and CBD beverages, entered into a Settlement Agreement with Joseph E. Meehan, the former chief executive officer of the Company, and Redcliffe Gardens Capital Limited, a consulting corporation controlled by Meehan. Meehan resigned his role as chairman of the board, effective immediately, as part of the agreement. Read more here.
CannTrust Holdings Inc.
CannTrust Holdings Inc., a minority investor in Phoena Holdings Inc. (formerly CannTrust Equity Inc.), made a Division I Proposal pursuant to the Bankruptcy and Insolvency Act (Canada). Subject to satisfying certain conditions, CannTrust intends to address its remaining liabilities, dispose of its residual assets, distribute its shares in Phoena, and dissolve in advance of Nov. 30, 2022, or as soon as practicable after that date. Read more here.
Debra BorchardtApril 21, 2020
The Flowr Corporation (OTC: FLWPF) raised C$20 million in a non-brokered private placement with the option to upsize the amount to C$25 million. The company said it expects to use the proceeds for general working capital purposes.
Chairman & Chief Strategist Steve Klein and Chief Executive Officer Vinay Tolia are leading the offering with commitments in excess of $10 million. Management and insiders will continue to own approximately 58% of the shares of the company post financing on a fully diluted basis (including equity incentives).
“Despite the challenging capital markets environment, we are extremely fortunate to announce this financing and to have continued support from management and insiders who have been instrumental in Flowr’s founding, strategic direction and financing since inception,” said Vinay Tolia, Flowr’s CEO. “This capital is expected to enable Flowr to become cash flow positive in H2 2020 as we build on our focus of delivering premium dry flower to the Canadian marketplace driven by our flagship product BC Pink Kush and other high THC strains we will be launching imminently as all of our 20 grow rooms in our Kelowna 1 facility will soon be in harvest cycles. We expect to continue to achieve premium price points in the market with our optimized library of high THC strains. Future revenue growth will be further enhanced with contributions from Holigen given the recent receipt of our EU GMP license in Portugal.”
Flowr also noted that it will release its fourth-quarter earnings after the close on Wednesday, April 29th, 2020 and will host a conference call to review results on Wednesday, April 29th, 2020 at 5:30pm ET.
In addition, certain directors, officers, employees and executives of Flowr, including Chairman & Chief Strategist Steve Klein, Chief Executive Officer Vinay Tolia, Founder and Managing Partner Thomas Flow, Managing Director, Europe Pauric Duffy and Managing Director, Australia & Asia Pacific Peter Comerford who currently collectively control approximately 58% of the Company have agreed to voluntary lock-up agreements in connection with the closing of the Offering whereby all shares held by these shareholders will be subject to restrictions on sale until released under the terms of the Lock-Up Agreements on the 12-month anniversary of the closing date of the Offering.
Debra BorchardtJuly 22, 2019The Flowr Corp. (TSXV: FLWR.V) was originally thought to be listing shares last week on the NASDAQ Marketplace, but that was shelved. Instead, the company announced on Monday that it agreed to sell 10,610,000 units of the company at a price of C$4.10 per unit for approximately C$43,501,000 in proceeds.
The underwriters were led by GMP Securities L.P. The Flowr Corp. also agreed to an over-allotment option to purchase and additional 1,591,500 shares, which would bring in an additional C$6,525,150 in gross proceeds. If that happens, the gross proceeds will be C$50,026,150. The deal is expected to close on August 8, 2019.
The company said it intends to use the net proceeds to fund, in part, its acquisition of the approximately 80% equity interest of Holigen Holdings Limited that it does not already own, working capital required for the construction and development of certain of Holigen’s and the company’s cultivation and production facilities, and for general corporate purposes.
The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. The stock is currently listed on the Toronto Exchange and was lately trading at C$4.82.
Terms
Each unit will be comprised of one common share of The Flowr Corp. and one-half of one common share purchase warrant. Each warrant will be exercisable to acquire one common share for a period of 24 months following the closing of the offering at an exercise price of $5.00 per warrant share. In the event that the volume-weighted average trading price of the common shares for ten (10) consecutive trading days exceeds $6.15, the company shall have the right to accelerate the expiry date of the warrants upon not less than fifteen (15) trading days’ notice.
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