The Flowr Corporation Announces First Quarter 2022 Results and Reinstatement of Trading

TORONTO, May 30, 2022 (GLOBE NEWSWIRE) --PRESS RELEASE-- The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) herein announces its financial and operational results for the first quarter results for the period ended March 31, 2022.   All financial information in this news release is reported in thousands of Canadian dollars and represents results from continuing operations, unless otherwise indicated.

Tom Flow, Interim Chief Executive Officer of Flowr, commented:

“The first quarter of 2022 showed that we remain on track with our objective on maintaining our status as a premium cannabis producer. Also, our continued focus on cost reductions is showing in our bottom-line improvements.”

SELECTED FINANCIAL AND OPERATIONAL RESULTS

The following table summarizes the company’s key financial and operational results:

Financial Results (presented in $000s)

• Gross revenue for Q1 2022 was $3,878 compared to $4,403 in Q1 2021, a decline of $525 or 12%. Net revenue during Q1 2022 was $3,463, $159 or 4% lower than Q1 2021. The decrease in revenue is primarily a result of a lower average net sale price, partially offset by higher volume. Sale of retail products during Q1 2022 was 257 kilograms compared with 541 kilograms in Q1 2021. Sale of cannabis through bulk wholesale channels during Q1 2022 was 923 kilograms compared to 131 kilograms in Q1 2021 primarily due to higher production from the K1 facility.
• SG&A expenses for Q1 2022 was $2,852 compared with $3,999 in Q1 2021, a decrease of $1,147 or 29% primarily as a result cost reduction measures the company implemented that began 2021 and continued in 2022.
• Gross loss for Q1 2022 was $898 compared with a profit of $143 for Q1 2021 primarily as a result a lower profit margin on products sold.
• Cost of sales for Q1 2022 was $3,678 compared to $2,730 for Q1 2021. The increase in cost of sales resulted from a significantly higher volume of cannabis sold during the current quarter at 1,180 kilograms compared with 673 kilograms sold during Q1 2021.
• The company recorded impairment charges totaling $29 in Q1 2022 compared with $nil in Q1 2021.
• Net loss of the company totaled $5,762 for Q1 2022 compared to a loss of $7,081 for Q1 2021. The change in net loss was primarily due to a higher gross loss more than offset by lower SG&A, a reversal in share-based compensation, lower depreciation and finance costs.

Operational Updates

• Q1 2022, Flowr continued full operation in all 20 grow rooms at the K1 facility and improved the THC level by an average of +4.9% in comparison to Q1 2021. 
• Q1 2022 harvest yield was 84% higher than Q1 2021 (1,232,654 grams vs 669, 307 grams).  
• Flowr has further increased its product offerings in Q1 2022 with the launch of BC Vanilla Frost and BC Tropical Zktlz in Quebec, BC Clementine Crush into British Columbia, and BC Strawnana in Alberta. 
• In Q1 2022 Flowr continued to trial more than 50 new genetic strains to offer consumers differentiated exotic genetics, with high THC, high terpene contents, strong sensory profiles and premium quality buds.  
• The company has made significant steps to improve product quality in Q1 2022, by adding a processing step to sort buds post-harvest, as well as adding moisture control packs to bulk and retail products. 
• The company has shown significant growth in retail penetration across its core markets of Ontario, Alberta and British Columbia with more than 60% of stores carrying a Flowr product. 

Adjusted EBITDA (Non-IFRS Measure)

Adjusted EBITDA is defined as net loss, plus (minus) income taxes (recovery), plus (minus) interest income (expense) including finance costs, plus depreciation and amortization, plus share-based compensation, plus (minus) non-cash fair value adjustments on biological assets and inventory sold, plus restructuring and transaction costs, plus (minus) loss (gain) on investments, plus impairment charges, and plus (minus) unusual or non-recurring items. Management believes this measure provides useful information as it is a commonly used measure in the capital markets and as it is a close proxy for repeatable cash used by operations.

For a full discussion of Flowr’s operational and financial results for the year ended Dec. 31, 2021, please refer to the company’s Management’s Discussion & Analysis and Consolidated Financial Statements for the year ended Dec. 31, 2021, which have been filed on SEDAR.

Reinstatement of Trading

The company is pleased to announce that the failure-to-file cease trade order issued by the Ontario Securities Commission on May 6, 2022 (“FFCTO”) against the company has been fully revoked by the applicable regulatory authorities.

The FFCTO was issued as a result of the company's failure to file the following periodic disclosure documents (the “Annual Filings”) by the filing deadline of May 2, 2022:

• the audited annual financial statements of the company for the year ended Dec.31, 2021;
• the management’s discussion and analysis of the company for the year ended Dec.31, 2021; and
• certificates of each of the Interim Chief Executive Officer and the Chief Financial Officer relating to the audited annual financial statements.

The Annual Filings were filed on SEDAR on May 20, 2022.

As previously announced on May 11, 2022, effective May 6, 2022, the TSX Venture Exchange suspended trading in the company’s securities as a result of the issuance of the FFCTO. The company applied to the TSXV for the reinstatement of trading of the company's securities on the TSXV. The reinstatement of trading of the company’s securities on the TSXV was granted by the TSXV on May 27, 2022 and the common shares of Flowr will be reinstated to trade effective at the opening on May 31, 2022.

In addition, further to the company’s press release dated May 2, 2022 in respect of the completion of the sale of Holigen Holdings, an arm’s length third party received a cash payment of C$1,250,478.72 and 96,354 common shares of Akanda Corp. as an advisory fee in connection with the services provided to the company in relation to the Holigen Sale.