Canadian producer The Flowr Corporation (TSXV: FLWR) (OTC: FLWPF) continues to pile losses, while promising that new genetics will entice domestic consumers and that its EU GMP operations in Portugal will bring future gains.
On Monday, the company released its earnings results for the third quarter ended Sept. 30, with net revenue climbing 14 per cent to $2.5 million from $2.2 million in the second quarter. But net revenue fell 11 per cent from $2.8 million in Q3 last year.
Cost of sales rose 22 per cent in the quarter to $7.3 million, from $6 million last quarter.
Selling, general and administrative expenses fell 14 per cent to $3.6 million from $4.2 million.
Net loss spiked 23 per cent to $9.2 million from $7.5 million.
Flowr ended the quarter with around $8 million in cash and cash equivalents.
During the quarter, the company says it increased operational capacity at its K1 and Kelowna Research Station facilities. It reported that 51 new and “exotic” genetics have been planted, and is planning to commercialize 12 new high-THC cultivars in 2022, three of which have been approved for the first quarter.
The firm introduced a new Dogwalkers pre-roll format of seven 0.35-gram joints in B.C., Alberta and Ontario. Flowr also released its new BC Strawnana high-THC flower in those provinces as well as Saskatchewan.
The company said it sent 6,500 clones of Strawnana, Black Cherry Punch and Pink Kush from its K1 facility to its EU GMP Sintra facility in Portugal, under its Holigen Holdings Limited subsidiary in the country. Flowr says it expects that facility to be operating at full capacity early next year.
In July, the firm said it made the largest bulk sale of cannabis in the European Union to date through its RPK Biopharma Unipessoal, Ltd. subsidiary in Portugal.
And in August, the company revealed a three-year exclusive deal with popular U.S. brand Cookies to distribute its products in Portugal via the Sintra facility.
According to Flowr, it’s started importing Cookies genetics from Canada to start production by the end of the year, and will consult with Cookies about distributing its products through Portugal’s existing pharmaceutical networks, as well as designing up to three proprietary outlets there.
While medical cannabis has been legal in Portugal since 2018, adult-use legislation has been proposed but has struggled to gain traction.
“As a result of our continuing efforts on cost reduction and divestment of non-core assets, SG&A expenses have decreased for three consecutive quarters, representing a 21-per-cent decrease from the same level in Q4 2020,” CEO Darryl Brooker said in a statement.
“The land sale agreement that was previously announced is scheduled to close in early December 2021 with the company to receive $5.3 million in cash, and a further $1.0 million cash receivable within six months upon satisfaction of certain conditions.”
He also noted an early repayment of $7.5 million toward Flowr’s syndicated credit facility, as well as a further $3-million payment from the land sale proceeds, bringing the principal amount to below $6 million by the end of the year.
“As we look ahead to the fourth quarter of 2021 and beyond, we are excited about the opportunities to continue growth in Canada and the E.U. Our focus will remain on executing our strategy to increase sales through new genetics and innovative product offerings, improving operational efficiency to ensure a consistent supply of high-grade premium products and maximizing the potential of Holigen.”