Flower One Provides Corporate Updates and Announces Date for Fourth Quarter 2019 Earnings Conference Call
- Unaudited preliminary fourth quarter 2019 revenues of $5.7 million, up 128% sequentially from the third quarter 2019.
- Unaudited preliminary full year 2019 revenues of $9.4 million, ahead of Company guidance of $9.0 million.
- Positive revenue trends continue into 2020; expects revenue in the range of $8.0 million to $10.0 million for the first quarter of 2020, with an average 11% month-over-month growth rate in sales to-date since September 2019.
- Receives Nevada state approval to launch The Clear’s premium line of vape products and Old Pal’s vape products.
- Cultivation of unique cultivars for Cookies and 22Red is on schedule with the anticipated launch of both brands in late Q2 of 2020 or early Q3 of 2020.
- Signs California’s leading vape company, Heavy Hitters, to portfolio of leading cannabis brands.
- Schedules Q4 and FY 2019 Conference Call for Thursday, April 16, 2020.
Flower One Holdings Inc. (the “Company”) (CSE:FONE, OTCQX:FLOOF, FSE:F11), a leading cannabis cultivator, producer and innovator in Nevada, today announced unaudited preliminary fourth quarter and full year 2019 revenue results, initiated revenue guidance for the first quarter of 2020 and provided additional business updates. Please note that all figures listed in this release are in U.S. dollars unless otherwise noted.
“Through exceptional execution and adherence to our strategic long-term growth plan, we exceeded our revenue expectations for 2019 based upon our preliminary numbers for the year,” said Ken Villazor, Flower One’s President and Chief Executive Officer. “Our focus and proven proficiencies in large-scale cultivation, manufacturing and distribution differentiate Flower One from other cannabis companies. It has been just over seven months since our first sale of product out of our flagship Nevada greenhouse facility. In that short period of time, we’ve gained an overwhelming amount of knowledge of and data on cannabis cultivation, extraction and inventory management as well as on compliance, product launches and retail distribution. Through this learning experience, we’ve accumulated a vast amount of proprietary know-how that will continue to position us well in the competitive cannabis space going forward.”
Kellen O’Keefe, Flower One’s Chief Strategy Officer, added, “Our brand portfolio continues to grow. The strength of our brands has provided us an entry point into almost every dispensary in the State, with retail penetration topping 95%. We are also seeing an increased number of white label brands interested in leveraging our unique capabilities. We are excited about both our pace of sales and our brand partners launched to-date, and over the coming months, we will continue to direct our efforts on delivering industry-leading performance.”
- Greenhouse & Production Facility Improvements: The Company continues to make operational improvements at its flagship greenhouse and production facility to enhance its post-harvest process and improve the overall quality and efficiencies of cultivation. These process improvements are aimed at increasing company revenues, reducing overhead costs and enabling Flower One to further service its higher-end and white label brands that often require highly unique and carefully managed cultivation strategies for the specific curated cultivars of its brand partners. With just over seven months as a fully operational company, Flower One continues to develop its list of operational and process improvements, checking off one achievement at a time as it works to distinguish itself as a truly differentiated cannabis company.
- Frankfurt Listing: Beginning on December 23, 2019, Flower One’s Euro-denominated shares are listed on the Frankfurt Stock Exchange (“FSE”) and trade under the symbol “F11.” The Company’s Canadian dollar-denominated and U.S dollar-denominated shares continue to be listed on the Canadian Securities Exchange under the symbol “FONE” and on the OTCQX under the symbol “FLOOF,” respectively. Flower One’s FSE listing is an important step in the Company’s growth and will allow European and UK investors to more easily participate in Flower One’s success while enabling the company to build a broader and more global shareholder base.
The FSE is one of the world’s largest trading markets for equity securities, and with share turnover of approximately 90%, is the largest of Germany’s seven stock exchanges. The FSE facilitates advanced electronic trading, settlement and information systems allowing it to meet the growing requirements of cross-border trading.
Brand Partner Highlights:
- Brand Launches: Flower One launched several brands into market in the fourth quarter of 2019, including Palms’ premium pre-rolls, Kiva’s Camino Gummies, and RDT’s Vegas QuickStrips™. In the first quarter of 2020, Huxton’s RISE, ZEN and HIFI pre-rolls also launched along with Kiva’s Terra Bites.
- State Approvals for Launch: The Company recently received Nevada state approval to launch several of its brands’ products. The State approved the premium line of The Clear, including pure-plant derived cannabis oils, for sale. These oils are anticipated to be in stores in the coming weeks. Nevada also approved for sale Old Pal’s vape formulations. Old Pal will now expand its offerings in the Nevada market from flower into disposable vapes with the launch of several news SKUs in early 2020.
- Old Pal’s Continued Success: Old Pal achieved the #1 flower brand status in the state of Nevada in October 2019, just three months after its first licensed sales from Flower One’s flagship greenhouse. Old Pal currently holds six of the top 15 cannabis SKUs in Nevada according to Headset.
- 22Red Partnership: In November 2019, Flower One announced its partnership with 22Red, a premier Southern California cannabis brand founded by world famous rock n’ roll band, System Of A Down’s bassist, Shavo Odadjian, which has become known for its brand authenticity and proprietary genetics. Through its partnership with Flower One, 22Red will make its first out-of-state expansion. The cultivation of 22Red’s genetics is progressing as planned, and initial sales including the brand’s entire selection of dry flower and pre-roll products, vape cartridges, and CBD selections are expected in late Q2 2020 or early Q3 2020.
- Cookies Partnership: The Company also announced a partnership with world renown cannabis and lifestyle brand, Cookies in November 2019, a brand widely recognized throughout the cannabis market for producing some of the highest quality and most famous cannabis cultivars in the world. Cookies’ unique genetics are currently in the process of being cultivated, and the brand is planned for a full launch in Nevada dispensaries in late Q2 2020 or early Q3 2020.
- Heavy Hitters New Brand Partnership: The Company today announces its latest brand partner agreement with California’s leading vape brand, Heavy Hitters. Heavy Hitters is among the top-selling brands in California with a loyal and dedicated consumer base. The premium vape brand is known for clean, cold filtered, high-potency cannabis vapes featuring proprietary terpene blends and cannabinoid profiles. Part of Mammoth Brands, a leading California cannabis producer and distributor, Heavy Hitters is leader in a portfolio of vape brands including The Farm and Surplus.
- Board of Directors: As an emerging, entrepreneurial business, constructing a diverse board by background, experience, ethnicity and gender is critical to Flower One’s ability to effectively oversee the direction of the Company. Flower One’s Board members hail from a variety of industry backgrounds to bring a wealth of experience and knowledge to their advisory roles. In January, the Company announced the addition of Molly Hemmeter, Flower One’s first female director, to the Board. Ms. Hemmeter has over three decades of experience advising private and public companies in the health and wellness space, with a particular focus on growth and sustainability. Ms. Hemmeter recently served as CEO, President and a member of the Board of Directors of Landec Corporation, a NASDAQ listed company in the health and wellness space with annual revenues of more than $550 million.
- Loan Agreement: In March 2020, the Company entered into a loan agreement (the “Agreement”) for up to $10,000,000. The Agreement is for a one-year term at a rate of 15% per annum, with interest-only payments on amounts drawn during the term of the loan. The Company can prepay any amount during the term of the loan without penalty. This facility provides Flower One with additional financial flexibility to support its ongoing operational focus on processing, finished goods production and high-volume packaging capabilities as the Company continues to introduce new, innovative cannabis brands to the Nevada market.
- Debenture Conversions: To date, 27% of the Company’s November 2019 convertible debentures and 26% of the Company’s March 2019 convertible debentures have been converted by holders. This conversion reduces the debt held on the Company’s balance sheet and provides for increased liquidity of the stock.
Q1 2020 Guidance
- With the first sales out of the greenhouse in August 2019, Flower One has just passed its seventh-month mark as an operational company. Sales continue to grow month over month by 11% on average. The Company is positive on its revenue trajectory throughout the current calendar year as additional products launch into market and products that have previously launched gain deeper market penetration over the coming months. At present, Flower One’s brands are sold in over 95% of dispensaries throughout the state of Nevada.
- Based on current performance trends, Flower One expects revenues for the first quarter of 2020 to be in a range of $8.0 million to $10.0 million.
Flower One management will be presenting at the 32nd Annual ROTH Conference in Laguna Niguel, California. Management will be presenting at 10 a.m. PT on Tuesday, March 17th as well as hosting meetings with investors throughout the day.
Q4 and FY 2019 Earnings Conference Call
Flower One also announced today that it will release its 2019 fourth quarter and year-end financial results after market close on Wednesday, April 15, 2020. The Company will host a conference call on Thursday, April 16, 2020 at 8:30 a.m. ET to review its financial results. To join the conference call, please dial 647-427-7450 or 1-888-231-8191. A live audio webcast of the call will be available at http://bit.ly/FONE-Q4-2019. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.
For those unable to join the live call, a replay will be available until Thursday, April 30, 2020. To access the archived conference call, please dial 1-855-859-2056 and enter the conference code 3257949. An archived replay of the webcast will be available online for 90 days.
About Flower One Holdings Inc.
Flower One is the largest cannabis cultivator, producer, and full-service brand fulfillment partner in the state of Nevada. By combining more than 20 years of greenhouse operational excellence with best-in-class cannabis operators, Flower One offers consistent, reliable, and scalable fulfillment to a growing number of industry-leading cannabis brands. 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.
The Company’s common shares are traded on the Canadian Securities Exchange under the Company’s symbol “FONE”, in the United States on the OTCQX Best Market under the symbol “FLOOF” and on the Frankfurt Stock Exchange under the symbol “F11”. For more information, visit: https://flowerone.com.
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 actual 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.
Forward-looking statements may include, without limitation, statements relating to the Company’s ability to close any offering of securities in connection with the filing of the Shelf Prospectus; the Company’s leadership as a cannabis cultivator, producer and full-service brand fulfillment partner; the Company’s ability to offer consistent, reliable and scalable fulfilment to its brand partners; and the production of the nation’s top-performing edibles brands.
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 Shelf Prospectus dated September 27, 2019 filed on its issuer profile on SEDAR at www.sedar.com.
The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement, the “Cautionary Statement regarding Forward-Looking Information” section contained in the Shelf Prospectus. All forward-looking statements in this press release are made as of the date of this press release. 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 Shelf Prospectus.
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.
Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. Flower One Holdings disclaims and does not undertake any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.