Flower One files for bankruptcy in Canada and plans to go private
After the markets closed on Monday, Flower One Holdings Inc. (CSE: FONE) (OTC: FLOOF) announced that it and its Canadian subsidiaries have sought and obtained an initial order from the Supreme Court of British Columbia pursuant to the Companies Creditors Arrangement Act (the “CCAA”). This is considered the equivalent of US bankruptcy court. The company also said it plans to go private by the end of the year to reduce the expense of being a publicly traded company. Flower One works with Cookies, Kiva, Old Pal, Heavy Hitters, Lift Ticket’s, HUXTON and Flower One’s leading house brand, NLVO, and more.
The company said the decision to commence CCAA proceedings was made after careful consideration of its financial situation and significant consultation with certain key Flower One creditors. The CCAA proceedings are intended to facilitate a restructuring of the Canadian company’s balance sheet and the injection of additional capital.
In September, Flower One announced that its ordinary shares listed on the OTCQB market would be transferred to companies in the OTC expert market. The expert market provides the lowest level of disclosure compared to other OTC market levels. Therefore, trading is limited to quotes on an unsolicited basis. This means that transactions in securities subject to an unsolicited expert market quotation are only accessible to brokers, institutions and other sophisticated investors, and not to average investors.
Decrease of sales
In August, Flower One reported results below expectations as the company reeled from consecutive periods of declining revenue due to funding issues. Green Market Report wrote at the time that the company reported second-quarter revenue of $7.9 million, which is below analyst Yahoo Finance Average’s estimate for revenue of $9. .6 million. The company recorded a net loss of $5.4 million for the quarter, compared to a net loss of $1 million for the same period last year. Earnings were a loss of one cent per share, in line with Yahoo estimates.
“Despite our team’s best efforts to continue to produce the highest quality cannabis possible at the lowest possible price, we are facing significant market pressures and with our current rate of cash burn, we must continue to explore all avenues to find working capital, and there is no guarantee the company will receive that funding,” CEO Kellen O’Keefe said when the company released its results.
In Flower One’s file, the company said it needed “adequate capital resources” to support its ongoing operations and development, adding that assessing its viability as a business “requires judgments about the ability of the company to execute its strategy by financing its future working capital needs”. The company’s overall liability balance had increased by $11.9 million since the end of last year and his company’s total liabilities stood at $138 million.
In addition to being a Canadian company, Flower One has also established a significant presence in Nevada. Its Nevada footprint includes its flagship facility, a 400,000 square foot high-tech greenhouse and a 55,000 square foot production facility, as well as a second site with a 25,000 square foot indoor grow facility and kitchen. commercial. Flower One currently produces a wide range of products from flowers, full spectrum oils and distillates to finished consumer packaged products, including a variety of: pre-rolls, concentrates, edibles, topicals and more for the most popular brands. cannabis performers.
PricewaterhouseCoopers Inc. has been appointed monitor. PwC has created a website at www.pwc.com/ca/FONE, where updates on the Canadian restructuring process, Monitor’s Reports to the Court, Court Orders and other information will be posted as they become available. During the CCAA process, Flower One’s US operations are expected to continue in the normal course and without interruption.