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April 27, 2020, 9:15 a.m. EDT

The Flowr Corporation Announces closing of CAD $20 million Private Placement led by Insiders

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TORONTO, April 27, Apr 27, 2020 (GLOBE NEWSWIRE via COMTEX) -- The Flowr Corporation (tsx.v:FLWR) /zigman2/quotes/205237089/delayed FLWPF -3.55% ("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.

/zigman2/quotes/205237089/delayed
US : U.S.: OTC
$ 0.34
-0.01 -3.55%
Volume: 103,672
Aug. 13, 2020 3:23p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$42.95 million
Rev. per Employee
N/A
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