The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) (“Flowr” or the
“Company”), a Canadian Licensed Producer and global leader in
premium cannabis R&D and innovation, today provided a corporate
update on various matters. Details are as follows:Private
PlacementFlowr intends to complete a non-brokered private placement
of up to 2,400,000 common shares of Flowr at a price of C$6.25 per
common share for aggregate gross proceeds of up to C$15 million
(the “Private Placement”).The Company expects to use the proceeds
of the Private Placement for general working capital purposes,
including for the funding of construction of certain operations of
Holigen Holdings Limited (“Holigen”). Holigen is a European-based
cannabis company in the process of developing large-scale
GMP-compliant cultivation facilities in Portugal and Australia that
are expected to provide medical cannabis products, ingredients, and
plants and seeds to markets globally.Investors participating in the
Private Placement, and investing an aggregate of approximately
C$3,600,000, include Flowr CEO Vinay Tolia, Chairman, Steve Klein,
through Core Flow Canada Holdings Inc. (“Core Flow”), as well as
individual members of Flowr’s Board of Directors (“Board”),
including new Board member Don Duet. The participation of
Flowr’s senior management team and Board members demonstrates their
long-term commitment to Flowr’s corporate strategy and business
model. Closing of the Private Placement is expected to occur
on or about May 10, 2019, but is at the discretion of the Company
(the “Closing Date”). The Company will announce the outcome of the
Private Placement after closing in a subsequent press
release. As of the date of this press release, management and
Board members currently own or exercise control over 60% of the
securities interests of Flowr (taking into account the Company’s
87,045,352 issued and outstanding common shares and 43,950,000
securities held by certain shareholders in a subsidiary of the
Company that are convertible into common shares of Flowr for no
additional consideration).“Through leading each round of financing
for the Company, Core Flow has a strong conviction in Flowr’s edge
in designing and constructing highly efficient facilities and
producing high quality cannabis products”, said Steve Klein.
“Moreover, Flowr is building a company, from its management team to
cultivators, that I believe is second to none."Pricing of the
Private Placement was determined by the Board based on the closing
price for the common shares on the date prior to announcement of
the Private Placement and in compliance with regulatory policies.
All common shares issued under the Private Placement will be
delivered from Canada and are subject to a hold period expiring
four months and one day from the Closing Date.The Private Placement
is subject to certain conditions including, but not limited to, the
receipt of all necessary regulatory approvals, including the
approval of the TSX Venture Exchange.The common shares have not
been and will not be registered under the U.S. Securities Act of
1933, as amended (the "U.S. Securities Act"), or any U.S. state
securities laws, and may not be offered or sold in the United
States or to, or for the account or benefit of, United States
persons absent registration or an applicable exemption from the
registration requirements of the U.S. Securities Act and applicable
U.S. state securities laws. This press release shall not constitute
an offer to sell or the solicitation of an offer to buy securities
in the United States, nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful.Holigen InvestmentPortugal Through its
investment, Flowr is supporting Holigen’s proposed €45 million
investment in Portugal to produce medicinal cannabis outdoors and
generate 200 jobs over the next four years. Holigen’s first
installation in Portugal is under construction in Sintra, with
21,500 square feet for cultivation, processing, GMP manufacturing
and R&D operations. Holigen has been granted a
cultivation license for its Sintra indoor facility which now has
mother plants growing and in development. In addition, the
GMP extraction and packaging areas in the Sintra facility have been
completed and the extraction equipment is in place and undergoing
testing. The GMP manufacturing inspection for Sintra’s indoor
facility is scheduled and expected to occur in June 2019.In
addition, this year, Holigen expects to initiate the installation
of one of the largest outdoor cannabis cultivation facilities for
cannabis sativa (THC) in the world in Aljustrel, Portugal, which
will have a combined production, transformation and R&D area of
more than 7,000,000 square feet. Holigen’s Aljustrel site is
now security fenced and is expected to be ready for inspection by
the Portuguese authorities in May 2019. This project has been
designated a Project of National Interest by the Portuguese
government, which ensures special handling and prioritization by
government agencies and access to low cost financing.AustraliaIn
Australia, Holigen has been licensed by the Office of Drug Control
(ODC) to cultivate and manufacture medicinal cannabis products, and
was granted Good Manufacturing Practice (GMP) by the Therapeutic
Goods Administration for labelling, secondary packaging and release
for supply in November 2018. Holigen is on track to have its
full manufacturing facility in Australia inspected to Good
Manufacturing Practice (GMP) later this year.Subject to available
financing, Phase 1 construction at the Australian facility is
expected to be finalized in the second half of this year in
preparation for an ODC inspection, and Phase 2 construction is
expected be completed by August 2019. Upon completion of
construction, inspections, permitting and licensing, Holigen
expects to start manufacturing in Australia by the end of this
year.As Holigen continues to progress through its licensing process
in Portugal and Australia, it has also been granted cannabis clone
import permits from Flowr as well as seed, tissue culture and
seedling import permits in Europe and Australia.Holigen, through
partnerships it has and is developing, has access to pharmaceutical
distribution in over 35 countries across Europe and the southern
hemisphere (excluding South America), including a distribution
partner that has approximately 170 client wholesale and
distribution outlets and is experienced in international importing
and exporting of certain medicines.Holigen also has a highly
skilled team in place with extensive experience in the
pharmaceutical, distribution and construction industry, including
senior engineers in the opiate industry (cultivation and
extraction), senior GMP specialists, senior regulatory pharmacists
experienced in dealing with European regulations and pharmacopeia,
and senior construction executives.Further to the announcement made
by the Company on December 20, 2018, Flowr is in the process of
closing its 19.8% interest in Holigen and is evaluating a further
acquisition and/or investment into Holigen. The Company
provides no assurances that a transaction with Holigen will be
completed as proposed or at all.Board and Management UpdateFlowr
also announced changes to its Board of Directors and the addition
of Thierry Elmaleh, as Head of Capital Markets.Current Board member
Rishi Shah has stepped down as Lead Independent Director, and
current Board member Karen Basian will replace him in the role. Don
Duet, former Partner, Head of Global Technology Division, Goldman
Sachs, will be filling Mr. Shah’s Board seat, and will join the
Audit Committee, Nominating and Corporate Governance Committee and
Human Resources and Compensation Committee, the latter of which he
will Chair. Additionally, Tom Flow has decided to transition
from his role as Co-CEO and Board member to the position of Founder
and Managing Partner, enabling him to better focus his time on
Flowr’s operations (including the ramp up of Holigen’s business),
as the Company continues to focus on scaling its operations
globally.“I can speak for the entire Board of Directors in
expressing our gratitude to Rishi and Tom for their many valuable
contributions to our company’s governance. We believe that
Don’s appointment highlights our continued focus on governance and
assembling a Board with diverse skillsets. We are also
excited to have Tom back in a role that better utilizes his passion
and expertise on our global operational initiatives, as we pursue
our goal of growing cannabis of the highest possible quality,” said
Mr. Tolia.Mr. Tolia continued, “with the addition of Thierry on our
team, we also believe we are well positioned to continue executing
on our capital markets strategy, as Flowr grows and gains
additional exposure to the investment community.”About New Board
Member and Head of Capital MarketsDon Duet – Over his nearly
30-year career at Goldman Sachs, Mr. Duet ran the bank’s Technology
Division, helping lead investments in emerging companies including
Square, Docker and Barefoot Networks. Mr. Duet currently serves as
Senior Advisor to McKinsey & Company and as an Advisory Board
Member to Centana Growth Partners, a growth equity firm. He
graduated from Marist College with a degree in Computer
Science.Thierry Elmaleh – Mr. Elmaleh brings 15 years of
progressively more senior leadership experience in capital markets
to Flowr. Most recently, Mr. Elmaleh was a Managing Director in the
Trading Products division at BMO Capital Markets, which was the
first Canadian Schedule 1 Bank to provide investment banking
services to the cannabis sector. Prior to joining BMO, Mr.
Elmaleh led the buildout of Susquehanna’s US equity and derivatives
business in Canada, was a Vice President in Institutional Equity
Sales at Bank of America Merrill Lynch & began his career as an
investment banking analyst at TD Securities. Mr. Elmaleh has
an MBA from the Rotman School of Management at the University of
Toronto and a BA in Economics from McGill University.Grant of
Equity IncentivesIn addition, Flowr also announced today that the
Board has approved the granting of an aggregate of 615,000
incentive stock options (the “Options”) and aggregate of 100,000
restricted share units (the “RSUs”) to certain officers of the
Company. The Options are exercisable at a price of CAD$5.93 per
share for a period of five years. The Options will vest either: (i)
in equal proportion on a monthly basis over a period of thirty-six
months, with the first monthly vesting to occur on March 31, 2019,
with each subsequent vesting to occur on each of the following
thirty-five (35) subsequent one (1) month anniversaries of that
date; or (ii) as to thirty-three and one-third percent (33⅓%) on
each anniversary of the date of commencement of employment for the
applicable officer. The RSUs will vest as to thirty-three and
one-third percent (33⅓%) on each anniversary of the date of
commencement of employment for the applicable officer.About The
Flowr CorporationFlowr, through its subsidiaries, holds a cannabis
production and sales license granted by Health Canada. With a head
office in Toronto and a production facility in Kelowna, BC, Flowr
builds and operates large-scale, GMP-designed cultivation
facilities utilizing its own growing systems. Flowr’s investment in
research and development along with its sense of craftsmanship and
a spirit of innovation is expected to enable it to provide
premium-quality cannabis that appeals to the adult-use recreational
market and addresses specific patient needs in the medicinal
market.For more information, visit www.flowr.ca. Follow Flowr on
Twitter: @FlowrCanada; Facebook: Flowr Canada; Instagram:
@flowrcanada; and LinkedIn: The Flowr Corporation.On behalf of The
Flowr Corporation:Vinay ToliaCEO and Director
Forward-Looking Information
This press release includes forward-looking information within
the meaning of Canadian securities laws regarding Flowr, Holigen
and their respective businesses, which may include, but are not
limited to: the Private Placement, including the size of the
Private Placement, dilution, use of proceeds, closing date and
required approvals, statements with respect to Core Flow’s
conviction in Flowr’s edge in designing and constructing highly
efficient facilities and producing high quality cannabis products,
Core Flow’s views on Flowr building a company that is second to
none, the transactions described herein, statements with respect to
Holigen developing large-scale GMP compliant cultivation facilities
that will provide medical cannabis products, ingredients, plants
and seeds to markets globally, Holigen’s markets, Holigen having
the ability to raise and invest €45 million into Portugal, Holigen
producing cannabis outdoors and generating 200 jobs over the next
four years, the production capacity of Holigen, the scale of
Holigen, including with respect to Holigen having one of the
largest outdoor cultivation facilities for cannabis sativa, the
status of Holigen’s licensing and inspection process, including the
timing of receipt of all required licenses and the timing of all
inspection, the partnerships Holigen is forming with distributors
globally, including the partnership with the distributor described
herein, Holigen’s facilities, Holigen seeking to have GMP compliant
facilities, the dates for inspections and final granting of
licenses for Holigen’s facilities and properties, the completion
and operational dates for Holigen’s facilities and properties,
including the timing thereof, the production capacity of such
facilities and properties, the extraction of dried flower at
Holigen’s facilities, the designation of Holigen’s Portuguese
projects being a Project of National Interest, which allows special
handling and prioritization by government agencies and access to
low cost financing, the completion of construction of Holigen’s
facilities in Australia, including each phase of completion and the
timing thereof, the timing in which Holigen expects to begin
manufacturing products in each of its facilities, the closing of
Flowr’s 19.8% interest in Holigen, including the timing thereof,
the Company evaluating a further acquisition and/or investment into
Holigen, the Company continuing to focus on scaling its operations
globally and pursuing its goal of growing cannabis at the highest
possible quality, Mr. Duet’s and Mr. Elmaleh’s appointment,
including the appointment of Mr. Duet highlighting Flow’s focus on
governance and diverse skillsets, Mr. Elmaleh’s enabling Flowr to
be better positioned to execute on its capital markets strategy,
Flowr’s investment in research and development along with its sense
of craftsmanship and spirit of innovation enabling it to provide
premium-quality cannabis that appeals to the adult-use market and
addresses specific patient needs in the medicinal market and other
factors. Often, but not always, forward-looking information can be
identified by the use of words such as “potential”, “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 Flowr’s
management and are based on assumptions and subject to risks and
uncertainties. Although Flowr’s 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 Flowr,
including risks relating to the failure to obtain regulatory
approvals, the failure to complete the transactions described
herein, including as a result of certain conditions not being
satisfied, the failure to complete the Private Placement or a
reduction in the amount of the Private Placement, which could
result in lack of funds available to Flowr for further development
and/or result in Flowr having to raise capital by alternative means
on less favourable terms, the dilution to shareholders as a result
of the Private Placement, Flowr not using the proceeds of the
Private Placement as described herein, the closing of the Private
Placement being delayed, Flowr not having an edge in designing and
constructing highly efficient facilities and producing high quality
cannabis products, which could result in Flowr losing a competitive
advantage over its peers, Flowr not building a company that is
second to none, Holigen’s inability to develop large-scale GMP
compliant cultivation facilities that will provide medical cannabis
products, ingredients, plants and seeds to markets globally, which
could have a significant impact on Flowr’s investment in Holigen,
Holigen not having access to the markets described herein, Holigen
not being able to raise and invest €45 million into Portugal, which
would significantly delay Holigen’s business plans, and materially
impact Flowr’s investment in Holigen, Holigen being unable to
produce jobs at the scale described herein, which would materially
impact its status with as a Project of National Interest and
materially affect Holigen’s ability to grow, the production
capacity and scale of Holigen being significantly less than
projected herein, competitors having larger facilities and sites
than Holigen, which could create an oversupply of the markets that
Holigen is targeting, Holigen failing to obtain the licenses and
permits described herein or being delayed in obtaining them, which
could materially impact the timing of operations, business,
financial condition and Flowr’s investment in Holigen, the
inspections described herein not being completed or being delayed,
which could materially impact the timing of operations, business,
financial condition and Flowr’s investment in Holigen, Holigen not
being able to form the partnerships described herein with
distributors globally, Holigen’s partnership with the distributor
described herein being terminated, risks associated with Holigen’s
facilities, Holigen not completing its facilities and properties,
or being delayed in completing them, which could have a martial
adverse impact the timing of operations, business, financial
condition and Flowr’s investment in Holigen, Holigen’s projects not
being designated or losing status as a Project of National
Interest, which would impact or result in the loss of the special
handling and prioritization by government agencies and access to
low cost financing for these projects, Flowr’s not closing its
19.8% interest in Holigen, which would result in a loss of Flowr’s
investment in Holigen, the Company not completing a further
acquisition and/or investment into Holigen, the Company not being
able to scale its operations globally and not being able to pursue
its goal of growing cannabis at the highest possible quality, which
could materially impact Flowr’s business, financial condition and
operations, Mr. Duet not bringing a set of diverse skills and/or
governance skills to Flowr, Mr. Elmaleh’s not enabling Flowr to be
better positioned to execute on its capital markets strategy, risks
relating to the use of Flowr’s or Holigen’s products, risks
relating to the markets in which Flowr and Holigen operate and/or
distribute their respective products, possible failure to realize
the anticipated benefits of the transactions described herein, the
reliance on information provided by Holigen about its business and
plans, the inability of Holigen to complete its licensing process
or construct its facilities or properties as a result of a lack of
funding, the cost of production of Holigen being more than
expected, resulting in lower earnings, Holigen not having one of
the largest cultivation facilities, or competitors being able to
construct and operate comparable facilities and properties,
Portugal and Flowr failing to provide Holigen with the climate,
workforce and cultivation expertise, as applicable, to produce one
of the lowest cost cultivation operations, Holigen not being able
to export low-cost cannabis and not having direct access to EU
markets and global markets, which would materially impact revenues
and earnings, Flowr’s industry leading cultivation expertise and
partnership with Holigen not enabling Flowr to gain exposure to the
European and Australian markets, Holigen not being able to
construct and license GMP compliant facilities, which could impact
the ability to sell products where such compliance is required, the
combination of Holigen and Flowr failing to create a worldwide
leader in production, the production capacity of such facilities
and properties not being achieved, which could materially impact
the value of Holigen, the inability to extract dried flower at
Holigen’s facilities, the relationship between Flowr and Holigen
failing to create a leading cannabis franchise in Europe and
Australia, Holigen’s inability to develop medical cannabis brands,
leveraging its distribution partnerships, or evaluating alternative
product lines, the partnership between Flowr and Holigen not
benefiting Holigen in executing on the licenses it holds and is
obtaining, Holigen failing to participate in the Australian
government’s export strategy or being delayed in participating in
such opportunity, Holigen and Flowr not being in a unique position
to act as a true medical cannabis multinational, Holigen’s
inability to grow the amount of cannabis described herein, which
could adversely impact revenues, the fact that the facilities
described herein may not include all the elements described in this
press release, which could adversely impact the partnership
described herein, Flowr not being able to sustain its competitive
advantage in cultivation and being unable to remain at the
forefront of industry innovation, whether as a result of failed
construction of the facilities described herein or otherwise, Flowr
not being able to meet demand or fulfill purchase orders, which
could materially impact revenues and its relationships with
purchasers, Flowr requiring additional financing from time to time
in order to continue its operations or assist Holigen with its
licensing and construction projects, and such financing may not be
available when needed or on terms and conditions acceptable to the
Company, new laws or regulations adversely affecting the Company’s
business and results of operations, results of operation activities
and development of projects, project cost overruns or unanticipated
costs and expenses, the inability of Flowr’s products to be high
quality, the inability of Flowr to produce and distribute premium,
high quality products, the inability to supply products or any
delay in such supply, Flowr’s securities, the inability to generate
cash flows, revenues and/or stable margins, the inability to grow
organically, risks associated with fluctuations in exchange rates
(including, without limitation, fluctuations in currencies), the
cannabis industry and the regulation thereof, the failure to comply
with applicable laws, risks relating to partnership arrangements,
possible failure to realize the anticipated benefits of partnership
arrangements, product launches (including, without limitation,
unsuccessful product launches), the inability to launch products,
Flowr not being able to provide premium quality cannabis that
appeals to the adult-use market and addresses specific patient
needs in the medicinal market, the failure to obtain regulatory
approvals, economic factors, market conditions, risks associated
with the acquisition and/or launch of products, the equity and debt
markets generally, risks associated with growth and competition
(including, without limitation, with respect to Flowr’s and
Holigen’s products), general economic and stock market conditions,
risks and uncertainties detailed from time to time in Flowr’s
filings with the Canadian Securities Administrators 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, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking information
can be guaranteed. Except as required by applicable securities
laws, forward-looking information speaks only as of the date on
which it is made and Flowr undertakes no obligation to publicly
update or revise any forward-looking information, whether as a
result of new information, future events, or otherwise.Neither the
TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this press
release. CONTACT INFORMATION:U.S. MEDIA:Tim Streeb,
ICR1-646-677-1800tim.streeb@icrinc.com
CANADIAN MEDIA:Rebecca Brown, Crowns
Agency1-647-456-5599rebecca@crowns.agency
INVESTOR RELATIONS:Raphael Gross,
ICR1-203-682-8253raphael.gross@icrinc.com
Bram JuddThe Flowr Corporation1-647-483-7065 ext.
1520bram@flowr.ca
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