FLWPF - Flowr Corp. Throws in Towel Looks For Buyers
Toronto-based The Flowr Corp. , (TSX.V: FLWR) (OTC: FLWPF) is officially on the market after it reported that it does not have enough of a runway to make it to the end of the third quarter, the company said in its financial results for the period ended Sept. 30.
According to regulatory filings, potential bidders submitted binding offers last Friday, with financial firm Ernst & Young Inc. acting as a monitor to seek the best deal that comply with requirements under the sale and investment solicitation process (SISP). The company added that the monitor will conduct and administer an auction since there are multiple qualified bids.
Flowr said it had working capital of C$2.5 million and an accumulated deficit of C$301 million. The company netted $1.8 million in revenue but saw nearly C$3 in net loss, versus C$7.6 million in the same time period last year.
By the end of the current quarter, Flowr used C$6.02 million of cash on operating activities and the company said that it does not have enough cash on hand to fund its way through the quarter. The company was also unable to secure the necessary funding.
The Toronto-based company has been selling off its subsidiaries and facilities over the quarter, and last month said it would seek an order for creditor protection from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA) – similar to a company in the U.S. seeking Chapter 11 bankruptcy protection.
In June, the company cut 40% of its workforce to “flatten its organizational structure and right-size SG&A with revenue,” it said in a news release . The company said most of the cuts were targeted at senior and middle management.
Flowr also sold noncore assets, including the Kelowna Research Station research and development facility to Hawthorne Canada Limited for an aggregate purchase price of C$15.9 million and its Flowr Forest property for C$3.4 million. The company also sold its indirect wholly owned subsidiary, Holigen Ltd, in a cash-and-stock deal.
The measures resulted in a reduction in SG&A costs of 32% and in cost of goods sold of 71% from the first quarter, according to the company . However, those reductions did not provide enough runway for the necessary restructuring.