Flora Growth Shares Increased 43.93%: Why It Happened

By Amit Chowdhry ● August 22, 2021
  • The shares of Flora Growth Corp. (NASDAQ: FLGC) increased by 43.93%. This is why it happened.

The shares of Flora Growth Corp. (NASDAQ: FLGC) – an all-outdoor cultivator and manufacturer of cannabis-derived products and brands – increased 43.93%, going from a previous close of $8.81 to $12.68. Investors appear to be responding positively to the company reporting selected financial and operating results for the 6-month period ending June 30, 2021.

First Half Financial Summary:

– Flora Growth generated revenues of +$2M with a gross profit of 60% (unaudited), as compared to revenues of ~$100K for 2020.

– The operating expenses for the first half were $6M, yielding a net loss of $4M (unaudited). However, these results were heavily affected by almost $3M of one-time IPO-related expenses (unaudited).

– At June 30, 2021, Flora’s cash balance was approximately $19 million with minimal debt (unaudited).

– Subsequent to June 30th, the company saw a substantial cash inflow from the exercise of the warrants sold as part of Regulation A. And to date, the company received commitments of more than $10 million (some unfunded), with $7.2 million in cash received and an additional $1 million pending clearing. Flora expects to see this amount continue to grow over the following weeks.

Q2 2021 Operational Highlights:

– Completed an IPO and successful public listing on the Nasdaq Capital Market exchange under the ticker symbol “FLGC”; Flora is the first known all-outdoor grower ever listed on the NASDAQ, the first cannabis company to list via a traditional IPO on an American exchange, and has what management believes the largest licensed cultivation footprint in Colombia

– Announced intent to buy 100% of Koch & Gsell, manufacturer of the leading Swiss hemp and tobacco pre-roll brand Heimat

– The company executed a strategic investment of $2.4 million into Hoshi International, opening up distribution of Flora’s product portfolio into the European Union (EU)

– Expanded into the U.K. and Central American markets with sales to new international distribution partners; bringing the total countries that Flora and its divisions currently have a product in the market to 13

– Formed Flora Lab manufacturing division that operates a modern 16,000-square-ft manufacturing facility and holds multiple GMP certifications with a diversified portfolio including over 190 products and 63 over-the-counter (OTC) products registered and licensed with INVIMA (FDA-equivalent in Colombia).

Operational Highlights Subsequent to Period End:

– Kasa Wholefoods., Flora’s food & beverage division, signed a sales agreement to supply food products to Colombia’s largest consumer packaged goods (CPG) distributor, Tropi, which has 130,000+ distribution points across 38 cities in Colombia; Kasa has since completed its first purchase order valued at approximately $1.1 million and expects this initial agreement to generate additional revenue of its CBD and hemp portfolio, expecting future sales to reach approximately $2 million per month

– Announced intent to buy 100% of Vessel Brand, an industry leader in luxury cannabis consumer technology

– Announced intent to form a joint venture with Canadian based Avaria, the manufacturer and owner of KaLaya – an award-winning pain cream distributed nation-wide across Canada

– As a result of the reformed Colombian cannabis legislation aimed at improving access to cannabis products for Colombians and positioning Colombia as the leader to supply the global cannabis market, Flora immediately announced that it had executed a Letter of Intent with Kiricann, an international distributor with operations in South Africa and distribution agreements in Germany and the EU, to provide its dried flower and derivatives; additionally, the Company announced plans for the manufacturing, sale, and distribution of CBD-infused food and beverage products; further plans to increase awareness across its premium brand and product portfolio as a result of the loosened marketing restrictions; and, lastly plans to manufacture custom cannabis pharmaceutical products for the Colombian medical cannabis market

– Announced intent with Evergreen Pharmacare, a licensed Australian importer and distributor of medical cannabis products, to supply its premium dried flower and derivative products to the Australian medical cannabis and OTC CBD markets

– Flora Beauty division formally launched Ô (“Awe”), its premium brand and product line designed and marketed by founding partner, trend-setter, and global beauty influencer Paulina Vega

– Announced that after conducting an exhaustive and meticulous review, it plans to relocate its headquarters to Miami, Florida by Q1 2022

– Continued the expansion of its scientific and academic endeavors with the appointment of another key advisor and partnership:

– Engaged Brigitte Baptiste as a strategic advisor and entered into a cooperative agreement with EAN University

KEY QUOTE:

“The first half of our fiscal year is highlighted by a number of tremendous accomplishments by our team despite challenges related to the global pandemic. Management believes each of our divisions gained significant traction relative to where we started the year as we execute on the strategic growth plan we laid out in December 2020, positioning shareholders for future success. At the end of last year, Flora was private, largely pre-revenue, and focused primarily in Latin America; during the past six months, Flora completed its IPO on the NASDAQ, while increasing its global distribution, revenue, and expanding its premium portfolio of global cannabis brands and products. We made a number of strategic hires and appointments in order to form a robust, highly experienced leadership team, while simultaneously putting our capital to work on an attractive risk-adjusted basis. We announced our intent to complete multiple strategic investments and acquisitions, entered into several international sales agreements for our cannabis flower and derivatives, and significantly expanded distribution and sales with our downstream, premium cannabis CPG brands and products in the pharmaceutical, natural wellness, cosmetics, food and beverage, and hemp textile segments. Going forward, we are excited about the strategic opportunities for incremental growth as we look to leverage our globally recognized house of brands and products into new markets and categories around the world, particularly throughout the Americas, EU, and Australia. In closing, the board, management, and staff at Flora would like to thank our shareholders who put their trust in us to grow their investment and return substantial value. We don’t take that lightly and are staunch believers in having a robust corporate governance regime, providing full transparency regarding our efforts and activities as we continue making progress towards becoming the global provider of premium cannabis CPG brands and products while responsibly and strategically accelerating revenue growth.”

– Luis Merchan, President and CEO of Flora

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.