Flower One Holdings Reports 2018 Fourth Quarter and Year-End Results

TORONTO, April 30, 2019 /CNW/ – Flower One Holdings Inc. (CSE: FONE) (OTCQB: FLOOF) (“Flower One” or the “Company”) today reported its financial and operating results for the fourth quarter and year ended December 31, 2018. All amounts are expressed in U.S. dollars unless indicated otherwise.

Fourth quarter operational highlights:

• Became a public company with the commencement of trading on the Canadian Securities Exchange on October 10, 2018;
• Commenced trading in the United States on the OTCQB Marketplace on November 6, 2018;
• Received approval from the State of Nevada for the recreational marijuana cultivation and production licenses for the Company’s 455,000 square foot commercial greenhouse cultivation and production facility (medical marijuana cultivation and production licenses were approved in July 2018); and
• Completed the acquisition of the assets of NLV Organics, Inc. and related parties (“NLVO”), a fully licensed and fully operational cultivator and producer. The acquisition accelerated the Company’s growth plan and scale-up efforts in Nevada.

The Company has continued to make substantial operational progress in the four months since completion of its fourth quarter and year ended December 31, 2018.

Operational highlights subsequent to the fourth quarter 2018:

• Last week, the Company announced that the conversion of its greenhouse was 95% complete. The greenhouse is now more than 60% canopied with five of eight zones fully planted;
• The greenhouse’s high-tech cutting cell rooms and three expansive, multi-density vegetative zones are also fully populated;
• Obtained lease equipment financing for up to $30M on February 11, 2019;
• Raised CAN $57.5M through a prospectus offering of convertible debenture units that closed on March 28, 2019; and
• Announced eight Brand Partnerships so far in 2019.

For more details on the greenhouse conversion, production facility construction, Brand Partnerships, and more, please refer to the Company’s Corporate Update issued on April 25, 2019, available here: http://bit.ly/FONEApr25.

“Flower One’s fourth quarter demonstrated the Company’s ongoing success in achieving very significant operational milestones including our transformation to a public company as well as our strategic acquisition of the assets of NLV Organics, which accelerated our ability to scale-up in the Nevada market,” said Ken Villazor, President and CEO.  “That pace of execution has only continued in the four months since the completion of our fourth quarter including and most notably that our state-of-the-art 400,000 square foot greenhouse is more than 60% canopied.”

Financial results

The Company was incorporated on December 18, 2017, and as such, no comparable information is available for the fourth quarter and full year periods ended December 31, 2017.

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.

Revenue for the fourth quarter and fiscal year was $130,969. Flower One only began recording revenue on November 9, 2018 subsequent to the acquisition of the assets of NLVO.

Cost of goods sold was $133,094 for the quarter and the year, and included production costs expensed and the cost of inventory sold.

For the quarter, the Company recorded a loss of $5,279,068, comprised of $2,734,111 in share-based compensation, $52,600 in foreign exchange loss related to the Company’s cash balances held in CAN$ and $2,778,677 in general and administrative expenses.

For the fiscal year, Flower One recorded a loss of $12,449,915, comprised of $3,239,257 in share-based compensation, $3,803,582 as a listing expense related to the RTO, $639,535 in foreign exchange loss related to the Company’s cash balances held in Canadian dollars and $5,053,861 in general and administrative expenses.

As at December 31, 2018, the Company had a working capital deficit of $32,866,665, largely due to a vendor note (“NLVO Note”) of $14,080,167 and the $18,000,000 note owed for the greenhouse.  The NLVO Note was repaid subsequent to December 31, 2018 and the maturity date on the $18,000,000 note was extended to March 31, 2020 with interest commencing April 1, 2019 at a rate of 9.5% per annum.

Flower One’s 2018 year-end financial statements and management’s discussion and analysis will be issued and filed on SEDAR at www.sedar.com on April 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 Wednesday, May 1, 2019 to review recent and upcoming milestones. You can join the call by dialing 647-427-7450 or 1-888-231-8191. A live audio webcast of the call will be available at http://bit.ly/FONE2018Q4. 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 OTCQB under the symbol “FLOOF.” For more information, visit: https://flowerone.com

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 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 short form prospectus dated March 22, 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.