Cannabis grower The Flowr Corp (CVE:FLWR) (OTCMKTS:FLWPF) said it was positioned to achieve its aim of being cash flow positive in the second half of 2020 as it continues to scale up the business.
Announcing third-quarter results to end September, the Toronto-headquartered firm noted the period saw it close a C$43.5 million equity financing and afterwards, in November, a C$25 million credit facility.
Construction of the Kelowna 1 flagship indoor facility in BC, is substantially complete and the last package for licensing has been submitted to Health Canada.
The group also closed on its remaining 80.2% interest in Holigen Holdings in August to create a global cannabis company with access to 7 million square feet of expected low-cost EU-GMP compliant outdoor-grown cannabis in southern Portugal.
Notably, Flowr said Q3 revenues were short of expectations as it continued to manage construction activity as well as ramp up sales and marketing.
"Our strategy is driven by a focus on building the right facilities, meaning no large-scale greenhouses, and growing quality product consumers want, instead of targeting scale before proving out our business. In Canada, we are on pace to end the year with our most significant capital expenditures complete and, for the first time, we will be operating without the additional burden of cultivating while simultaneously completing construction on our flagship indoor facility," Vinay Tolia, Flowr’s chief executive, told investors.
In the quarter, Flowr produced 447 kilograms of dried cannabis, a decrease of 3% compared to the second quarter, mainly due to two rooms at Kelowna 1 being used to support clone production rather than using them for growing product.
Net revenue was around C$1.3 million, impacted by the concurrent construction and production at Kelowna 1, as well as the timing of the propagation of clones for Flowr Forest and a C$0.4 million impact from product returns and pricing adjustments.
The net loss was C$14.9 million, compared to a loss of C$5.6 million in the same period a year ago.
“Globally, we continue to target an enormous opportunity from an efficient footprint as the integration of Holigen is advancing as expected," added Tolia.
"We continue to invest significantly in our global operations and our first cannabis harvest from Portugal is expected later this year. Additionally, we are advancing the EU-GMP certification process for Sintra, our indoor cultivation and manufacturing facility in Portugal, with an eye on having GMP compliant product available for sale in early 2020. Based on demand for EU-GMP compliant product in Germany, Australia, and other countries, we believe we are well positioned to distribute products into these underserviced markets."
Shares in Toronto dropped 11.8% to C$2.45.
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