The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) (“Flowr” or the
“Company”) announced today that it has closed its previously
announced non-brokered private placement of 20,041 Units (as
defined below) for gross proceeds of CAD$20,041,000 (the
“Offering”). The Company expects to use the proceeds of the
Offering for general working capital purposes. The Company
has the discretion to increase the Offering for an additional
approximate CAD$5,000,000, bringing aggregate gross proceeds to
CAD$25,000,000. In the event the Company closes on additional
subscriptions, it will issue a news release announcing such
additional subscriptions.
“Despite the challenging capital markets
environment, we are extremely fortunate to close on this financing
and to have continued support from management and insiders who have
been instrumental in Flowr’s founding, strategic direction and
financing since inception,” said Vinay Tolia, Flowr’s CEO. “This
capital is expected to enable Flowr to become cash flow positive in
H2 2020 as we build on our focus of delivering premium dry flower
to the Canadian marketplace driven by our flagship product BC Pink
Kush and other high THC strains we will be launching imminently.
Future revenue growth is expected to be further enhanced with
contributions from Holigen given the recent receipt of our EU GMP
license in Portugal”.
Chairman & Chief Strategist Steve Klein and
Chief Executive Officer Vinay Tolia led the Offering with
commitments in excess of $10 million. Management and insiders will
continue to own approximately 59% of the shares of the Company post
financing on a fully diluted basis (including equity
incentives).
In addition, certain directors, officers,
employees and executives of Flowr, including Chairman & Chief
Strategist Steve Klein, Chief Executive Officer Vinay Tolia,
Founder and Managing Partner Thomas Flow, Managing Director, Europe
Pauric Duffy and Managing Director, Australia and Asia Pacific
Peter Comerford, who currently collectively control approximately
58% of the Company, agreed to voluntary lock-up agreements (the
“Lock-Up Agreements”) in connection with the closing of the
Offering whereby all shares held by these shareholders will be
subject to restrictions on sale until released under the terms of
the Lock-Up Agreements on April 27, 2021. The Lock-Up
Agreements are in addition to lock-up agreements already entered
into by Pauric Duffy and Peter Comerford in connection with the
acquisition of Holigen Holdings Limited.
Additional Information about the
Offering.
The Offering consists of units of the Company
(the “Units”) at a price of CAD$1,000.00 per Unit. Each Unit
consists of one subordinated secured debenture of the Company
(each, a “Debenture”), convertible into 1,724 common shares of the
Company (“Common Shares”) at a conversion price of $0.58 and 1,724
Common Share purchase warrants (each, a “Warrant”) with an exercise
price of $0.76.
Each Debenture is comprised of CAD$1,000.00
principal amount of convertible debentures of the Company. The
Debentures will bear interest at a rate of 10.0% per annum from
April 27, 2020 (the “Closing Date”), calculated semi-annually in
arrears on June 30 and December 31 of each year. Interest
will, subject to TSX Venture Exchange (“TSXV”) approval, be paid
annually in Common Shares and paid on December 31 of each year,
with the last interest payment to be paid on the fourth anniversary
of the Closing Date (the “Maturity Date”). Subject to TSXV
approval, the conversion price with respect to the Common Shares
issued as payment in kind on account of interest shall be the
market price of the Common Shares on the business day immediately
prior to the conversion date of such interest payment.
Notwithstanding the foregoing, in the event that the TSXV does not
approve the payment of interest in Common Shares for any particular
interest payment period, such interest shall instead be paid in
cash pursuant to the debenture indenture entered into between the
Company and the debentureholders.
The Debentures will be convertible into Common
Shares at the option of the debentureholder at any time and from
time to time prior to the Maturity Date upon such holder providing
five (5) business days’ notice to the Company. The conversion price
with respect to the Common Shares issued upon conversion of
Debentures is $0.58 per Common Share. Debentureholders
converting their Debentures will be entitled to receive accrued and
unpaid interest thereon for the period from and including the
date of the latest interest payment date, to and including the
date of conversion.
Any outstanding principal amount of the
Debentures not converted prior to the Maturity Date will be repaid
by the Company, at the election of the holders of the Debentures,
in cash or Common Shares on the Maturity Date.
Each Warrant entitles the holder thereof to
acquire one Common Share (each, a “Warrant Share”) at an exercise
price of $0.76 per Warrant Share (the “Exercise Price”) for a
period of 36 months from the Closing Date (the “Expiry Date”). Any
Warrants not exercised prior to the Expiry Date shall be deemed to
be void and of no further force and effect.
The Debentures will rank subordinate to any and
all current secured indebtedness and senior to any and all current
and future unsecured indebtedness of the Company and any and all
future secured indebtedness of the Company.
AltaCorp Capital Inc. ("AltaCorp") is
participating in this Offering. AltaCorp is a subsidiary of ATB
Financial (“ATB”), which entered into a credit agreement with the
Company for access to debt financing of up to CAD$25 million on
November 18, 2019 (the “Credit Agreement”). AltaCorp will receive a
fee of $150,000 in the aggregate in connection with its role in the
Offering.
All securities issued under the Offering are
subject to the customary four-month hold period and may not be
traded before August 28, 2020. In addition, securities issued to
subscribers in the United States will be subject to a hold period
under the U.S. Securities Act of 1933, as amended (the "1933 Act")
and can only be resold in strict compliance with the applicable
exemptions from the registration requirements of the 1933 Act.
The Offering remains subject to the final
acceptance of the TSXV. Flowr intends to file a material change
report with respect to the Offering within 10 days of the Closing
Date.
About The Flowr Corporation
The Flowr Corporation is a Toronto-headquartered
cannabis company with operations in Canada, Europe, and
Australia. Its Canadian operating campus, located in Kelowna,
BC, includes a purpose-built, GMP-designed indoor cultivation
facility; an outdoor and greenhouse cultivation site; and a
state-of-the-art R&D facility that is currently under
construction. From this campus, Flowr produces recreational and
medicinal products. Internationally, Flowr intends to service
the global medical cannabis market through its subsidiary Holigen,
which has a license for cannabis cultivation in Portugal and
operates GMP licensed facilities in Portugal and Australia.
Flowr aims to support improving outcomes through
responsible cannabis use and, as an established expert in cannabis
cultivation, strives to be the brand of choice for consumers and
patients seeking the highest-quality craftsmanship and product
consistency across a portfolio of differentiated cannabis
products.
For more information, please visit flowrcorp.com
or follow Flowr on Twitter: @FlowrCanada and LinkedIn: The Flowr
Corporation.
On behalf of The Flowr Corporation:
Vinay ToliaCEO and Director
Contact Info:
INVESTORS & MEDIA:Thierry ElmalehHead of Capital
Markets(877) 356-9726 ext. 1528thierry@flowr.ca
Forward-Looking Information and Statements
This press release contains “forward-looking
information” within the meaning of Canadian Securities laws, which
may include but is not limited to: the intended use of proceeds of
the Offering; the ability of the Company to increase the size of
the Offering and the announcement of any closings thereof; the
Lock-Up Agreements, including the terms thereof; conversion of the
Debentures into Common Shares; the calculation of interest on the
Debentures and dates for payment thereof; the conversion price for
Common Shares issued as payment in kind on account of interest on
the Debentures, and TSXV approval thereof; payments of interest on
the Debentures being made in cash; the repayment of any outstanding
principal under the Debentures in cash or Common Shares on the
Maturity Date; the terms of the Warrants; the ranking of the
Debentures with respect to future indebtedness of the Company; fees
to be paid to AltaCorp; the applicable hold periods and
restrictions on resale for the securities issued under the
Offering; receipt of final approval from the TSXV for the Offering;
Flowr becoming cash flow positive, and the timeline therefor;
Flowr’s focus on delivering premium dry flower to the Canadian
marketplace; the launch of additional high THC strains by the
Company, and the timeline therefor; Holigen enhancing further
revenue growth; the anticipated timing for the Company filing a
material change report in respect of the Offering Flowr servicing
the global medical cannabis market and operating GMP-designed
manufacturing facilities in Portugal and Australia; Flowr
supporting improving outcomes through responsible cannabis use and
striving to be the brand of choice for consumers and patients
seeking highest-quality craftmanship and product consistency; and
Flowr’s business, production and products. 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 information and statements are based on the current
expectations of Flowr’s management and are based on assumptions and
subject to risks and uncertainties. Although Flowr’s management
believes that the assumptions underlying such information and
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 Flowr, including risks relating
to: the Company being unable to use the proceeds of the Offering as
intended; the inability of Flowr to not close additional
subscriptions; the inability of the Company to make interest
payments on the Debentures on the scheduled dates for payment, or
at all; the inability of the Company to repay any outstanding
principal under the Debentures on the Maturity Date; the inability
of the Company to receive TSXV approval to make interest payments
on the Debentures in kind by issuing Common Shares; the inability
of the Company to incur any future indebtedness; the Company not
receiving final approval from the TSXV for the Offering; Flowr not
becoming cash flow positive on the anticipated timeline, or at all;
Flowr being unable to raise additional capital if required; Flowr
having to seek creditor protection to the extent that it does not
become cash-flow positive by H2 2020 and cannot raise additional
capital; Flowr being unable to deliver premium dry flower to the
Canadian marketplace; the inability of the Company to launch
additional high THC strains on the anticipated timeline or at all
Holigen being unable to enhance further revenue growth for the
Company; the inability of the Company to file a material change
report with respect to the Offering on the anticipated timeline, or
at all; Flowr being unable to service the global medical cannabis
market and/or operate GMP-designed manufacturing facilities in
Portugal and Australia; Flowr being unable to support improving
outcomes through responsible cannabis use and/or striving to be the
brand of choice for consumers and patients seeking highest-quality
craftmanship and product consistency; the construction and
development of the Company’s cultivation and production facilities;
general economic and stock market conditions; adverse industry
events; loss of markets; future legislative and regulatory
developments in Canada and elsewhere; the cannabis industry in
Canada generally; the ability of Flowr to implement its business
strategies; Flowr’s inability to produce or sell premium quality
cannabis, risks and uncertainties detailed from time to time in
Flowr’s filings with the Canadian Securities Administrators; the
Company’s inability to raise capital or have the liquidity to
operate or advance its strategic initiatives and many other factors
beyond the control of Flowr.
Although Flowr has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking information or statements, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking information
or statement can be guaranteed. Except as required by applicable
securities laws, forward-looking information and statements speak
only as of the date on which they are made and Flowr undertakes no
obligation to publicly update or revise any forward-looking
information or statements, whether as a result of new information,
future events or otherwise. When considering such forward-looking
information and statements, readers should keep in mind the risk
factors and other cautionary statements in Flowr’s Annual
Information Form dated April 3, 2019 (the “AIF”) and filed with the
applicable securities regulatory authorities in Canada. The risk
factors and other factors noted in the AIF could cause actual
events or results to differ materially from those described in any
forward-looking information or statements.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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