Replies to post #15 on Fire & Flower Holdings Corp (FAF)

[FUNMAN]

FIRE & FLOWER EARNINGS LEAVE UNANSWERED QUESTIONS AROUND MATURING DEBT

https://grizzle.com/fire-flower-faf-q3-2019-earnings/

This is the same company that put out a false hit job on Trulieve yesterday that cause the PPS to drop $3.

That one had an unattributed author.

This article is not exactly a hit job, but it's explanation of a debt crisis is overblown, and does not include all of the facts.

By: SCOTT WILLIS
DECEMBER 17, 2019
MARIJUANA ANALYSIS
BOTTOM LINE:

Independent Canadian cannabis retailer Fire & Flower (TSE: FAF) is expanding its retail footprint at a rapid pace.

The company has gone from only 9 stores in February to an estimated 33 by year-end.

Revenue is also up, nicely hitting $13 million a quarter from $10 million in the February quarter-end.

However, like most cannabis companies Fire and Flower (F&F) needs to deal with some big debt maturities on the horizon before investors can be confident they aren’t about to get diluted out of existence.

F&F has $43 million of cash, but $47 million of debt due in June and July 2020. When you add on the $5 million a quarter burn rate, it’s highly likely there won’t be enough cash to pay off the debt.
The simple example below shows that even if the company wasn’t burning cash on operations it would still spend all $43 million paying off the debt due in June and July.

DEBT MATURITY SCHEDULE AND FUTURE CASH BALANCE

Source: SEDAR, Grizzle Estimates

So now the question becomes, what is the most likely outcome for the debt?

For the $20 million of convertible debt due in July and owned by licensed producers, we think the LPs will negotiate the conversion of the maximum amount allowed by Ontario regulations (9.9% ownership of F&F), or $13.7 million of the $20 million.

This would lead to 10% dilution for shareholders.

The remaining ~$6 million will be renegotiated into a new convertible bond or will be paid off with another debt or equity deal.

Now on to the other $27 million of convertible debt.

This debt is held by a number of private parties and will be renegotiated into higher-interest debt or converted to shares at a lower conversion price.

Potential dilution is at least 16%.

On top of dilution from debt, Fire and Flower’s $43 million of cash should only last until April based on future store build-out costs and the cashflow deficit.

We estimate the company needs to raise $70 million more to reach 85 stores by YE 2021 and keep the lights on.

They will likely raise this money through a combination of equity and additional convertible debt. Investors are diluted either way.

The Risks to Owning Fire and Flower Before August 2020
It is unlikely Fire and Flower’s stock price will be higher 6 months from now while debt is converting to shares and the company is issuing more diluting securities to raise the funds they need to grow. When share supply exceeds demand, stock prices go down not up.
Fire and Flower is building a strong retail footprint in Canada, but at what cost.

The prudent move as an investor is to sit on the sidelines until 1 of 2 catalysts take place:

Management finishes issuing shares to fund growth and has a clear path to profitability
The stock price increases to $2.00/sh or above leading Couche-Tard to exercise their millions of warrants, leaving Fire and Flower flush with cash and ready for expansion.
Until investors see one of these catalysts play out, the only item on the menu is dilution, dilution and more dilution.



A FULL ROUNDUP OF EARNINGS
Total revenue was $13.7 million versus $11.1 million last quarter and $2.5 million in the third quarter of 2018.
For the period ending Nov. 2, comprehensive sales including corporate and licensed retail locations increased 20% from the second quarter to $18.6 million.

Total revenue was $13.7 million versus $11.1 million last quarter and $2.5 million in the third quarter of 2018.

Cannabis and cannabis-related accessory sales were up 23% quarter-over-quarter and accounted for nearly 87% of total revenue with wholesale and digital development comprising the remainder.

F&F recorded net comprehensive income of $10.2 million which marked a major improvement year-over-year from the $22.6 million loss posted last year.

Diluted earnings per share were $0.07 as the company swung to a profit, although the net income was largely attributed to accounting gains related to the revaluation of its convertible debt.

The gross profit margin contracted from 36.5% in the prior quarter to 34.7%.

The company also announced the completion of its $25.9 million investment by Alimentation Couche-Tard that was part of a larger potential investment into the company.



RETAIL FOOTPRINT EXPANDING RAPIDLY
Ten new retail locations were opened during the recent quarter bringing the company’s retail presence to 30 cannabis stores across western Canada.

Moreover, asset purchase agreements were made with Cannabis Cowboy subsidiaries that will strengthen the company’s foothold in Alberta with another 8 cannabis retail locations set to open in 2021, including stores in the key urban Calgary market.

STORE ROLLOUT SCHEDULE

Source: Fire and Flower

With the emerging Canadian cannabis industry facing headwinds, Fire & Flower continues to deliver a track record of growth and meeting our objectives. We anticipate meeting our goal of 45 open and operating stores by the end of our fiscal year.
Fire and Flower CEO Trevor Fencott
The company’s pace of growth is expected to remain on fire with 85 stores targeted for the end of next year and 135 locations by the end of fiscal 2021.



HIFYRE DIGITAL PLATFORM DRIVING CUSTOMER ENGAGEMENT
Fire & Flower’s data-centric retail strategy involves its proprietary Hifyre digital retail and analytics platform which is designed to drive customer loyalty and sales.

It gathers and analyzes consumer data to derive valuable insights surrounding purchase patterns and enhance consumer connectedness.

In less than two months, the new Spark Perks membership program has already reeled in over 50,000 customers who on average spend 44% more per transaction than non-members.

Management anticipates that revenues will continue to rise due to new store additions, the acquisition of new licenses, and the build-out of the Hifyre digital platform.

These strategic growth initiatives combined should help the company gain meaningful share in the fast-growing Canadian cannabis market.

Fire & Flower ended the day up 1%.

Analysts at GMP FirstEnergy, Eight Capital, and Echelon Wealth Partners have all reiterated their buy ratings on the stock over the last few weeks.

[FUNMAN]

Cannabis edibles and vaping products coming soon to the Battlefords
Dec 19, 2019

Cannabis-infused edibles and vaping products will soon be available in the Battlefords.

https://battlefordsnow.com/2019/12/19/cannabis-edibles-and-vaping-products-coming-soon-to-the-battlefords/

Fire and Flower Cannabis Co. and 5 Buds Cannabis are awaiting orders to arrive for their shops in the area.

The federal government recently announced cannabis edibles, extracts and topical products have been approved and are now being made available, even though they became legal in October.

District Manager for Fire and Flower in Saskatchewan and Manitoba Andrey Kharitonov hopes to see the arrival of chocolates in the company’s shops in North Battleford and Battleford as early as Friday.

He is still waiting to see what chocolate products will be coming at this point.

All cannabis edibles are required to be limited in strength up to a maximum of 10 milligrams of THC per single serving, for example in one chocolate bar.

Kharitonov expects to see cannabis vape products to arrive shortly as well.

More edibles and vape products will come in January.

He said it is good to see cannabis edibles in particular now available to meet the demand.

“People have been asking for that product all year round, since cannabis has been legalized,” Kharitonov said. “So obviously whenever we can fulfill the needs of the customer, it’s great.”

Corey Tyacke, consultant for 5 Buds Cannabis which has a shop in North Battleford, said the company has submitted orders for edible products but doesn’t expect they will arrive until sometime in the new year.

“There has been lots of delays by the licensed producers,” he said. “I think it’s kind of a team effort, between the licensed producers and Health Canada and the retailers, to get this product out within the guidelines that Health Canada sets out.”

As a result, he said not many stores will see many of these new products yet.

Tyacke said the local 5 Buds shop may have some vape products by the weekend, but is not 100 per cent sure. The edible products will arrive later.

“Like every new industry, there are delays. As excited as we are to get these products in, I think it really comes down to just being patient,” he said.

The company has placed orders for chocolates, gummies, disposable vape pens and vaporizer cartridges, as well as beverages.

Tyacke said the new variety of cannabis products will offer more options for customers.

“All those products are going to come in different types, so there will be lots of THC-driven products, THC-CBD balanced products, and also some CBD-only products coming as well,” he said.

—

[e-mail]

On Twitter: @battlefordsnow

[FUNMAN]

Ontario Budtenders—New Mandatory CannSell Retail Training for Edibles, Topicals and Concentrates Available Now

Do you suppose all of Fire & Flower's new employees are already certified? How about the older ones in other provinces?

CannSell module on edibles, topicals and concentrates launches today on CannSell.ca—training upgrade is free for existing CannSell certificate holders until January 15

TORONTO, Jan. 02, 2020 (GLOBE NEWSWIRE) -- Lift & Co. (LIFT.V) (LFCOF) today launched an update to CannSell, Ontario’s mandatory cannabis retail training certification, with a new module covering the responsible sale of new cannabis formats—edibles, topicals and concentrates. All Ontario cannabis retail budtenders, store managers and store authorization holders must update their training for new legal product formats to work in an Ontario cannabis retail location.

Lift & Co. developed CannSell in partnership with MADD Canada, and with approval of the Alcohol and Gaming Commission of Ontario (AGCO) is the exclusive, mandatory cannabis retail training program for all of Ontario.

Key dates:

? January 2—CannSell program is updated with new content.
? January 2 to 15—Ontario retail staff CannSell certified before January 2, 2020 can enroll for the new standalone content for free
? January 16, onward—Ontario retail staff certified before January 2, 2020 can enroll for the new standalone content for $10 +HST
? New registrants to CannSell, effective today, January 2, 2020, will have access to the full CannSell program for $64.99 + HST

The module content focuses on basic knowledge about these new classes of cannabis, explains how consumption methods affect consumer experience, outlines recommendations for responsible consumption and requirements for encouraging and ensuring the responsible sale of new cannabis products.

The Government of Ontario announced on December 12, 2019 steps to move to an open market for Ontario retail cannabis stores starting in January, 2020. To-date, more than 2,700 Ontarians are certified by CannSell to work in retail stores in the province.

About Lift & Co.
Lift & Co. (LIFT.V) (LFCOF) is a publicly traded technology company modernizing the cannabis industry.

Forward Looking Statements

This news release and each of the documents referred to herein contains “forward-looking information” within the meaning of applicable Canadian and United States securities legislation. All statements, other than statements of historical fact, included herein are forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “is expected”, “expects”, “scheduled”, “intends”, “contemplates”, “anticipates”, “believes”, “proposes” or variations (including negative and grammatical variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Such statements are based on the current expectations of management and are based on assumptions and subject to risks and uncertainties. Although management believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this press release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the Company.

Although Lift & Co. Corp. (“the Company”) 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.

There can be no assurance that such forward-looking statements will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. 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, and subject to change after such date. The Company disclaims any intention or obligation to update or revise such information, except as required by applicable law, and the Company does not assume any liability for disclosure relating to any other company mentioned herein.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as the term is defined in the policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this release.

SOURCE Lift & Co. Corp. (“Lift & Co.” or the “Company”)

For further information:

Lift & Co.

Kasia Malz
Chief Financial Officer
416-953-6657
[e-mail]

Nikki Laoutaris
Communications Manager
647-464-0148
[e-mail]

[FUNMAN]

New Fire & Flower cannabis store set to blossom in Toronto’s Chinatown area

Edmonton-based company spreads its roots in Ontario

This is part of what is so ludicrous with Health Canada's regulations. Companies that want to apply for retail licenses must have signed leases in hand (that they are paying monthly rentals on) and put up tens of thousands of dollars on the barrelhead for the license application.

That's why it's so important for Fire and Flower to have Couche-Tard as a partner. They are financially able to do what many competitors cannot do. They can go all in on the first 10 licenses during phase 1 and then the next 20 during phase 2, all during 2020.

Ontario being the biggest market with over 14M people and only 26 cannabis shops is ripe for rapid growth.

It's looking as if Ontario will issue 240 licenses by year end. FFLWF intends to control 12.5% of cannabis distribution in the province.

So far I like what's happening - FUNMAN

By David Yasvinski
January 2, 2020

https://www.thegrowthop.com/cannabis-news/new-fire-flower-cannabis-store-set-to-blossom-in-torontos-chinatown-area

Fire & Flower signage has appeared in the window of what will be one of Toronto’s newest cannabis dispensaries at 433 Spadina Avenue.

However, the appearance of signs alone does not mean an opening is imminent. Fire & Flower has had a much larger location secured in the city’s Yorkville location for almost a year as it waits for the chance to apply for a licence to sell cannabis.

Trevor Fencott, the chief executive officer of Fire & Flower, said neither of the two Toronto locations are licenced yet, but the company will be submitting applications as soon as permitted by the government. “We’ve always been pretty public about our belief in the Ontario market, that it would eventually open up, so we’ve kept a portfolio of strategic assets in the province and one of them that we’re very excited about obviously is the Spadina-College location,” he told The GrowthOp.

“I think it’s going to be very important for our strategy. We’ve been preparing for more than a year now.”

But Fencott said that while they are excited that Ontario has opened up the market, he is concerned that it will remain difficult for retailers to distinguish themselves as long as the province maintains control over distribution. Fire & Flower deals with a similar system in Alberta, where the CEO predicts the market will soon see a mass closing of the stores that struggled to stand out without the ability to compete on price or product selection. And Ontario could be next.

“You’re going to get a boom for the next 12 months when stores are opening and then the hard reality that retail is a difficult business at the best of times.”

As for Fire & Flower, the company intends to play to its strengths, Fencott said, and focus on using data from its digital retail platform to identify and serve up the products consumers covet most. “We’re designed from the ground up to do this,” he said. “I’m comfortable that we’ll be competitive. If we can’t be a normal retailer, we will be a next gen retailer, which is what we already are.”

The company plans to open as many stores as the province permits. “We’re allowed, I believe, to have 10 for the first cohort and we will have 10,” he said. You’re allowed to 30 by December of 2020… we’re going to try to hit every one of those milestones.”

The Edmonton-based Fire & Flower has more than 20 stores currently in operation throughout the country, with the majority located in Alberta and Saskatchewan. The company’s sole Kingston location was recently honoured for Best Retail Interior, Ontario, Canada by the International Property Awards.

[FUNMAN]

Stifel: Green Thumb, Curaleaf Best 2020 Cannabis Stock Picks

Nice explanation of what happened too. - FUNMAN

By Newsmax Finance Staff
Thursday, 09 January 2020
08:52 AM

https://www.newsmax.com/finance/streettalk/stifel-green-thumb-curaleaf-cannabis/2020/01/09/id/949060/

Cannabis analysts at Stifel expect a rebound in the first half of this year after an array of disasters struck marijuana stocks in 2019.

Barron’s reported that Stifel thinks "Ontario store openings should uncork a Canadian bottleneck, while U.S. operators will grow out of the shadow of their stumbling northern counterparts.:

Stifel and its newly acquired Canadian affiliate GMP "see upside for smaller outfits like Fire & Flower Holdings (FAF. Canada). The stocks of American pot sellers were caught in the downdraft, but their steady growth let them raise capital in debt markets even as equity funding shriveled.," Barron's explained.

Stifel’s favorite U.S. operators are Green Thumb Industries (GTII. Canada) and Curaleaf Holdings (CURA. Canada).

"The fact that pot is illegal under federal law forced U.S. operators to go to Canada for stock listings. Their shares were dragged down some 40%, on average, in the sector’s selloff last year," Barron's said.

Retail sales jumped, with the market doubling in many states. Stifel expects growth to continue in 2020 at a rate of at least 25%, powered by new recreational markets such as Illinois, Barron's said.

Well-funded operators are likely to thrive in that robust American cannabis environment, Stifel believes. It has "buy" recommendations on Trulieve Cannabis (TRUL. Canada), Cresco Labs (CL. Canada), TerrAscend (TER. Canada), iAnthus Capital Holdings (IAN. Canada) and Harvest Health and Recreation (HARV. Canada).

Meanwhile, marijuana ETFs stumbled into 2020, adding to woes for investors who got burned last year trying to chase a one-time market darling, Bloomberg reported.

The ETFMG Alternative Harvest ETF, ticker MJ, sank 1.3% on the first day of the year, while broad market indexes rallied to fresh records. The drop continued a nine-month swoon for the exchange-traded fund that only a year ago was attracting money by the bushel on speculation the industry would continue its meteoric rise.

It ended last year down 30% for one of the worst returns among all ETFs as the companies it tracks delivered dire sales and profit warnings.

The ongoing struggles for cannabis ETFs are a sharp blow to retail investors who tried to get in on the frenzied marijuana boom that began two years ago after Canada and California deregulated production. Instead of a ride straight up, they got the bust part of the cycle that often characterizes nascent industries.

[FUNMAN]

It's a good day for you 1 day after buying in :-)