NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES
OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION
DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES.
The Needle Capital Corp. (TSXV:NEDL.P)
(“
Needle” or the “
Company”), a
capital pool company as defined under Policy 2.4 – Capital Pool
Companies (“
CPC”) of the TSX Venture Exchange (the
“
Exchange”), is pleased to announce it has entered
into a letter of intent dated February 12, 2018 (the
“
LOI”) with The Flowr Corporation
(“
Flowr”), a private company incorporated under
the Business Corporations Act (Ontario), whereby Needle and Flowr
will complete an arrangement, amalgamation, share exchange or
similar transaction to ultimately form the resulting issuer (the
“
Resulting Issuer”) who will continue on the
business of Flowr (the “
Transaction”), subject to
the terms and conditions outlined below. Needle intends that the
Transaction will constitute its Qualifying Transaction, as such
term is defined in the policies of the Exchange.
Flowr, through its subsidiary, The Flowr Group
(Okanagan) Inc., which has its producer’s license under the Access
to Cannabis for Medical Purposes Regulations (ACMPR), is a
vertically-integrated Canadian cannabis company, from seed to sale,
with head offices in Markham, ON and large-scale, Good
Manufacturing Practices (GMP) compliant production facilities in
Kelowna, B.C.
In connection with the Transaction, Needle
anticipates that the 7,200,000 shares in the capital of Needle (the
“Needle Shares”) currently issued and outstanding
will be consolidated (the “Consolidation”) on a
basis to be determined once pricing of the Brokered Private
Placement (as defined below) is finalized.
Summary of the Qualifying Transaction
The LOI contemplates Needle and Flowr completing
an arm's length business combination transaction, pursuant to which
Needle Shares, or Resulting Issuer shares (as the case may be),
will be issued to holders of shares of Flowr on the basis of one
post-Consolidation Needle Share (or Resulting Issuer share as
applicable) for every one Flowr share (the “Exchange
Ratio”), provided that the Exchange Ratio may change in
order to give effect to a deemed value of $0.15 per
pre-Consolidation Needle Share.
As described below, on completion of the
Transaction, the securityholders of Flowr would own a majority of
the issued and outstanding shares of the Resulting Issuer.
The common shares of the Resulting Issuer will be listed for
trading on the Exchange. Further information about the proposed
Transaction will be provided in a subsequent news release.
The parties to the Transaction are at arm’s
length and it is therefore anticipated that the approval of the
shareholders of Needle in respect of the Transaction will not be
required. The Company does plan to hold a special meeting of
shareholders whereat, among other things, the shareholders of
Needle will be asked to approve: (i) the Consolidation; (ii)
the change of name of Needle to a name provided by Flowr; (iii) the
appointment of a new slate of directors, conditional upon
completion of the Transaction; and (iv) the continuance to become a
corporation governed by the Business Corporations Act (Ontario). It
is anticipated that the Transaction and the definitive agreement in
respect of the Transaction (the “Definitive
Agreement”) will be put before the shareholders of Flowr
for their approval.
Pursuant to the terms of the LOI, until the
earliest of (i) the execution of the Definitive Agreement; (ii)
mutual agreement of Needle and Flowr; or (iii) the termination of
the LOI in accordance with its terms, Needle and Flowr have agreed
not to solicit, negotiate, accept or discuss with any other entity,
any transaction that would be in opposition to or in competition
with the Transaction.
The completion of the Transaction is subject to
the satisfaction of various conditions as are standard for a
transaction of this nature, including but not limited to (i) the
negotiation of the Definitive Agreement; (ii) receipt of all
requisite regulatory, stock exchange, court or governmental
approvals, authorizations and consents; (iii) the absence of any
material change or a change in a material fact or a new material
fact affecting Needle or Flowr; (iv) completion of the Brokered
Private Placement (as defined below); and (v) if applicable, each
company having received appropriate approvals from their
shareholders. There can be no assurance that the Transaction will
be completed on the terms proposed above or at all.
Brokered Private Placement
In connection with the Transaction, it is
anticipated that Flowr will complete a brokered private placement
of Flowr common shares. The size of the offering and the issue
price at which the Flowr common shares will be sold are to be
determined in the context of the market (the “Brokered
Private Placement”). Subject to applicable laws and
Exchange Policies, it is anticipated that each Flowr share issued
pursuant to the Brokered Private Placement will be exchangeable
into freely tradable common shares of the Resulting Issuer upon
completion of the Transaction.
The Resulting Issuer
Upon completion of the Transaction the Resulting
Issuer is expected to change its name to The Flowr Corporation or
such other name as determined by Flowr and the Resulting Issuer
will be a technology issuer under the TSX-V Rules.
Concurrent with the completion of the
Transaction, it is expected that all directors and officers of
Needle will resign and be replaced by nominees put forth by Flowr.
Additional directors will be added to the board of directors of the
Resulting Issuer (the “Board”) in the normal
course and once identified, information with respect to the
proposed additional directors will be included in a subsequent news
release.
Control Persons
Core Flow Canada Holdings Inc., a holding
company existing under the laws of the State of New York, currently
owns 48,265,168 shares of Flowr, representing approximately 46% of
the total issued and outstanding shares of Flowr as at the date
hereof (calculated on an undiluted basis).
Arm's Length Transaction
The proposed Transaction is an arm's length
transaction in accordance with the policies of the TSXV and is not
subject to Needle shareholder approval.
Sponsorship
Flowr is proposing to apply to the TSX-V for an
exemption from applicable sponsorship requirements, failing which
Flowr will ask the lead agent of the Brokered Private Placement to
act as sponsor.
About The Needle Capital
Corp.
The Needle Capital Corp. is a capital pool
company. The Company's principal business activity is to identify
and evaluate opportunities for acquisition of assets or business.
The Company was founded on April 25, 2017 and is headquartered in
Calgary, Alberta.
About The Flowr Corporation
Flowr, through its subsidiaries, is a
vertically-integrated Canadian cannabis company focused on the
natural science of cannabis. With head offices in Markham, ON. and
production in Kelowna, B.C., Flowr builds and operates large-scale,
GMP compliant cultivation facilities utilizing their own patented
growing systems. Flowr’s investment in research and development
ensures that its master growers are able to supply patients with
consistent, high-quality medicinal cannabis. With a sense of
craftsmanship and a spirit of innovation, Flowr is also well
positioned with a line of premium quality cannabis products for the
upcoming adult-use market.
Website: flowr.ca
Additional Information
A comprehensive press release with further
particulars relating to the Transaction, including further
particulars of the Resulting Issuer and the Brokered Private
Placement, will follow in accordance with the policies of the
Exchange. In addition, a summary of Flowr's financial
information will be included in subsequent news release. All
information contained in this press release with respect to the
Company and Flowr was supplied, for inclusion herein, by the
respective parties and each party and its directors and officers
have relied on the other party for any information concerning the
other party.
Contact Information
For more information or interview requests, please contact:
The Needle Capital Corp. Daniel Lanskey - Director, President
and Chief Executive Officer 61 40888518
The Flowr CorporationAnthony Giorgi - Director and Chief
Executive Officer: tony@flowr.caHelen Hatzis: media@flowr.ca
Cautionary Note
As noted above, completion of the Transaction
is subject to receipt of all requisite regulatory, stock exchange,
court or governmental approvals, authorizations and consents,
approval of the shareholders of Flowr and Needle (as applicable),
and completion of the Consolidation by Needle. Where applicable,
the Transaction cannot close until the required approvals have been
obtained. There can be no assurance that the Transaction will be
completed as proposed or at all.
Investors are cautioned that, except as
disclosed in the continuous disclosure document containing full,
true and plain disclosure regarding the Transaction, required to be
filed with the securities regulatory authorities having
jurisdiction over the affairs of the Company, any information
released or received with respect to the Transaction may not be
accurate or complete and should not be relied upon. The trading in
the securities of Needle on the Exchange, should be considered
highly speculative.
Trading in the common shares of the Company is
presently halted and is expected to remain halted pending closing
of the Transaction. While halted, the common shares of the Company
may only trade upon Exchange approval and the filing of required
materials with the Exchange as contemplated by Exchange policy.
Forward-Looking Information
Although the Company believes, in light of the
experience of its officers and directors, current conditions and
expected future developments and other factors that have been
considered appropriate that the expectations reflected in this
forward-looking information are reasonable, undue reliance should
not be placed on them because the Company can give no assurance
that they will prove to be correct. When used in this press
release, the words "estimate", "project", "belief", "anticipate",
"intend", "expect", "plan", "predict", "may" or "should" and the
negative of these words or such variations thereon or comparable
terminology are intended to identify forward-looking statements and
information. The forward-looking statements and information in this
press release include information relating to the business plans of
Needle and Flowr, the Transaction (including Exchange approval,
court approval, and the closing of the Transaction), the board of
directors and management of the Resulting Issuer upon completion of
the Transaction and the Brokered Private Placement. Such statements
and information reflect the current view of Needle and/or Flowr,
respectively. Risks and uncertainties that may cause actual results
to differ materially from those contemplated in those
forward-looking statements and information.
By their nature, forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements, or
other future events, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
following risks: (i) there is no assurance that Needle and Flowr
will obtain all requisite approvals for the Transaction, including
the approval of their respective shareholders (as applicable), the
approval of the Exchange for the Transaction (which may be
conditional upon amendments to the terms of the Transaction) or
court approval of the Transaction; (ii) there is no assurance the
Brokered Private Placement will be completed as contemplated or at
all; (iii) following completion of the Transaction, the Resulting
Issuer may require additional financing from time to time in order
to continue its operations and financing may not be available when
needed or on terms and conditions acceptable to the Resulting
Issuer; (iv) new laws or regulations could adversely affect the
Resulting Issuer's business and results of operations; and (v) the
stock markets have experienced volatility that often has been
unrelated to the performance of companies. These fluctuations may
adversely affect the price of the Resulting Issuer's securities,
regardless of its operating performance. There are a number of
important factors that could cause Needle’s and Flowr’s actual
results to differ materially from those indicated or implied by
forward-looking statements and information. Such factors include,
among others: currency fluctuations; limited business history of
Needle; disruptions or changes in the credit or security markets;
results of operation activities and development of projects;
project cost overruns or unanticipated costs and expenses, and
general market and industry conditions. The terms and conditions of
the Qualifying Transaction may be based on the Company's due
diligence and the receipt of tax, corporate and securities law
advice for both the Company and Flowr. The Company undertakes no
obligation to comment on analyses, expectations or statements made
by third parties in respect of the Company, Flowr, their
securities, or their respective financial or operating results (as
applicable).
Needle cautions that the foregoing list of
material factors is not exhaustive. When relying on Needle’s
forward-looking statements and information to make decisions,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. Needle has
assumed that the material factors referred to in the previous
paragraph will not cause such forward-looking statements and
information to differ materially from actual results or events.
However, the list of these factors is not exhaustive and is subject
to change and there can be no assurance that such assumptions will
reflect the actual outcome of such items or factors. The
forward-looking information contained in this press release
represents the expectations of Needle as of the date of this press
release and, accordingly, is subject to change after such date.
Readers should not place undue importance on forward-looking
information and should not rely upon this information as of any
other date. Needle does not undertake to update this information at
any particular time except as required in accordance with
applicable laws.
This press release is not an offer of the
securities for sale in the United States. The securities have
not been registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent
registration or an exemption from registration. This press
release shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the securities in
any state in which such offer, solicitation or sale would be
unlawful.
Completion of the Transaction is subject to a
number of conditions, including but not limited to, Exchange
acceptance and if applicable pursuant to Exchange requirements,
shareholder approval. Where applicable, the transaction cannot
close until the required shareholder approval is obtained. There
can be no assurance that the transaction will be completed as
proposed or at all.
Investors are cautioned that, except as
disclosed in the management information circular or filing
statement to be prepared in connection with the Transaction, any
information released or received with respect to the Transaction
may not be accurate or complete and should not be relied
upon. Trading in the securities of a capital pool company
should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way
passed upon the merits of the Transaction and has neither approved
nor disapproved the contents of this press release.
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.