Flower One Holdings Inc. (the “Company”) (CSE: FONE) (OTCQX: FLOOF), today announced that it has entered into a debt financing agreement (the “Agreement”) with RB Loan Portfolio II, LLC for up to US$30,000,000.
“With the completion and full planting of our flagship 400,000 square foot greenhouse, we are now in a continuous harvest cycle with our Nevada operations,” said Chief Financial Officer, Geoff Miachika. “This financing will principally support the acceleration of Flower One’s processing, finished goods, and high-volume packaging capabilities, leveraging our adjoining 55,000 square foot production facility to introduce and facilitate the Nevada product launches of our growing portfolio of Brand Partners.”
The Agreement is for a two-year term at a rate of LIBOR plus 8% with interest only payments for the term of the agreement. The Company has the ability to extend the term for a further 6 months and to pre-pay the outstanding debt at any time during the term, subject to a pre-payment penalty. As part of the agreement, RB Loan Portfolio II, LLC and certain assignees will receive, with respect to each advance, a 25%-warrant coverage (the “Warrants”) with the warrants having a term of 30 months. With respect to each advance, the Company will issue the Warrants at an exercise price equal to the greater of (A) the 20-day volume weighted average price (VWAP) of the Common shares of the Company (the “Common Shares”) on the Canadian Securities Exchange from the date of such advance, multiplied by 1.2 with respect to half of such Warrants and 1.4 with respect to the other half; and (B) the closing market price of the Common Shares on the trading day immediately prior to the announcement of such advance.
The Company has done an initial advance of US$20,000,000 and issued 1,139,757 warrants with a strike price of CAD$3.46 and 1,139,757 warrants with a strike price of CAD$4.03.
The Company will use the proceeds from the advance to further invest in its 400,000 square foot greenhouse and for general working capital and operational purposes.
About Flower One Holdings Inc.
Flower One is the largest cannabis cultivator, producer and full-service brand fulfilment partner in the highly lucrative Nevada market. Flower One’s fully operational flagship 400,000 square foot greenhouse and 55,000 square foot processing and custom packaging facility is used for cannabis cultivation, processing, production and high-volume custom packaging of dry flower, pre-rolls, cannabis oils, distillates, concentrates, edibles, topicals and infused products. Operating under continuous harvest, Flower One is capable of producing 140,000 pounds (62,500 kilograms) of dry flower per year, housing over 80,000 plants per crop cycle across eight flower zones. The Company also owns and operates a 25,000 square-foot indoor cultivation and production facility in North Las Vegas, with nine grow rooms, and owns the established NLV Organics consumer brand of cannabis products.
Leveraging its scale and more than 20 years of greenhouse operational excellence, Flower One offers consistent, reliable, high-volume, and just-in-time fulfilment to a growing number of established cannabis brands, including Flyte Concentrates, Rapid-Dose Therapeutics’ Quick Strip, Old Pal, Palms, HUXTON, CannAmerica Brands, Grenco Science (G Pen), and The Medicine Cabinet. The Company is fully-licensed for medical marijuana cultivation and production, as well as recreational marijuana cultivation and production in the state of Nevada.
The Common Shares are traded on the Canadian Securities Exchange under the Company’s symbol “FONE” and in the United States on the OTCQX Best Market under the symbol “FLOOF.” For more information, visit: https://flowerone.com.
Forward Looking Statements
Statements in this press release that are not statements of historical or current fact constitute “forward looking information” within the meaning of Canadian securities laws and “forward looking statements” within the meaning of United States securities laws (collectively, “forward-looking statements”). Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of the Company to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes,” “belief,” “expects,” “intends,” “anticipates,” “potential,” “should,” “may,” “will,” “plans,” “continue” or other similar expressions to be uncertain and forward looking. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Forward-looking statements in this press release include, but are not limited to, the Company’s ability to maintain a continuous harvest cycle or to introduce and facilitate the Nevada product launches of its portfolio Brand Partners; the growing portfolio of Brand Partners; statements about the Company’s strategy; future operations, prospects and the plans of management; the Company’s ability to achieve its objectives and plans, including the timing and results of those objectives; the estimated production outputs; the Company’s ability to offer consistent, reliable, high-volume, and just-in-time fulfilment to a growing number of established cannabis brands; the Company’s potential to become the leading cannabis cultivator, producer and innovator in the Nevada market; the scale and capacity of the Company’s cultivation, processing and high-volume packaging facilities in Nevada; and the Company’s ability to fund its continued operations.
The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational and medicinal cannabis marketplaces in the United States through its subsidiary Cana Nevada Corp. Local state laws where Cana Nevada Corp. operates permit such activities; however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Corporation’s business are contained under the heading “Risk Factors” in the Company’s annual information form dated November 7, 2018 filed on its issuer profile on SEDAR at www.sedar.com.
Although the Company has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: the Company’s dependence on obtaining regulatory approvals; investing in target companies or projects that are engaged in activities currently considered illegal under United States federal law; changes in laws; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth and state adoption due to inconsistent public opinion and perception of the medical-use and adult-use marijuana industry; and regulatory or political change.
The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement, the “Forward-Looking Statements” section contained in the Company’s most recent management’s discussion and analysis (“MD&A”), which are available on SEDAR at www.sedar.com. All forward-looking statements in this press release are made as of the date of this press release. The Company does not undertake to update any such forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also subject generally to assumptions and risks and uncertainties that are described from time to time in the Company’s public securities filings with the Canadian securities commissions, including the Company’s most recent MD&A.