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Now, let me quickly cover our operating expenses. On the whole, SG&A lowered by 7% over the contrast duration in 2014. Sales and also marketing expenses lowered 25% year on year and also 44% quarter on quarter driven by a couple of factors. Initially, advertising and promo cost decreased by over $10 million versus the prior year as a result of delayed or terminated activities as an outcome of COVID-19 and also in addition to raised spending from in 2015 to catch retail room - aluminium awning.


financial investment, but Canada payment expenses reduced because of head count reductions. As well as about Q4, compensation expenses declined by $4 million following our business restructuring actions and the short-term furlough of business retail personnel because of the closure of our corporate shops. G&A costs enhanced by 2% year over year however decreased 18% quarter over quarter due partially to a decrease in professional costs, reduced center costs and also lower traveling expenses.


R&D costs lowered by 34% quarter on quarter as we are currently reallocating our R&D initiatives to concentrate on jobs that have high commercial return capacity with less focus on pharmaceutical-driven clinical trials. Stock-based compensation expenditure in Q1 reduced 63% versus previous year to $28.6 million, partially due to the forfeiture of options resulting from staff decreases that took place throughout the quarter.




Next off, I would certainly like to review free cash money flow. Our cost-free money flow in the very first quarter of monetary '21 was a discharge of $181 million which mores than 50% improvement compared to the prior year. Our working capital decreased year over year due to reduced inventory degrees. And importantly, we finished the quarter with inventory of $389 million, slightly down from the previous quarter.


Capex declined to $62 million, down both on a year-on-year basis and also a quarter-on-quarter basis. As you can see in our quarterly results, we are making development against our vital economic metrics that we presented at our June investor conference. On profitability, we delivered a decrease in SG&A load as a portion of sales, while we are working to return to our 40% gross margin target.

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Prior to I close, I want to offer a couple of crucial factors to consider on Q2. First, from a net income standpoint, we anticipate progressive improvement in our Canadian Rec company as store openings in Ontario need to supply ongoing tailwind. Our critical services ought to proceed to see solid development from a brand-new item launch as well as increased distribution, while we anticipate Storz & Bickel to see even more normalized growth in the second quarter.


Third, while we expect a sequential pick-up in advertising expenses as well as profession promotion tasks as COVID-related restrictions are raised, we expect to see extra benefit from reduced headcount as we finish our business evaluation in coming months. So to sum up, we are proceeding against our tactical concerns, we continue to be concentrated on enhancing our business as well as operational execution, while preserving our economic discipline - awning supplies.


Operator, David and I would certainly enjoy to take concerns from experts. [Operator guidelines] Your very first concern comes from Vivien Azer from Cowen. Please proceed.-- Cowen and also Company-- Expert Hi. Thank you. Greetings. I intended to focus on your outlook for rates. David, you noted some rate realignments on vapes and afterwards layered on top of that obviously the value launch.






Simply trying to consider sort of order of size, where you believe you're going to see one of the most pressure on the leading line from the cost deflation that you discussed? Thanks. awning manufacturers.-- Principal Exec Policeman Yeah. From a top-line point ofview, Viv, I assume that we'll remain to see the worth flower category expand.


But once more, I believe that's just a healthy advancement out there. I likewise just want to discuss that also. Like the-- as we remain to overcome obstacles, as it associates with gross margins, our purpose is to supply that over 40% gross margin, also with an expanding value sector which suggests we just have to develop our production properties so that we can provide effectively where the consumer wishes to spend - aluminum sun shade.

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-- Cowen and also Business-- Analyst Thanks. As well as if you could just discuss the vape cost changes that you pointed out?-- Ceo Yeah. I believe, Viv, we still have-- the marketplace is so young, it's-- it really feels various to me than even more well-known markets where you see a fad start and after that people have to adhere to.


And also we do not believe that places a whole lot of pressure on our leading line because we're just not all that large in vape, and also our company believe we have the margins to be a little more aggressive which is why we're mosting likely to be a bit more hostile on 510s.


Thank you. Our Next question originates from Tamy Chen from BMO Funding Markets. Please go ahead.-- BMO Capital Markets-- Expert Yes, thanks. Excellent morning. Thanks for the inquiry. I wanted to touch on the new high THC difficulties that you architectural awnings establish on your item quality for blossoms. So when I believe about your current expand assets, several are rather big and some are rather labor-intensive.




So my concern is, I mean exactly how can these facilities I guess meet the brand-new high THC difficulties that you've set for blossom continually at range, and also do it at much better margins than you're doing now, especially if prices pressure proceeds to increase?-- Principal Executive Officer Yeah, Tamy. So I assume-- you could correct me if I'm incorrect right here, however I think like 88% of our result in the quarter was high-THC flower.


We're also doing a great deal of work around optimizing that impact. We'll search for some products for-- to count perhaps a little bit on outside grow as we move forward. So I think it's much less about what we can creating as well as perhaps even much less about the margins in each facility.