Market Overview

THE FLOWR CORPORATION CLOSES OVERSUBSCRIBED $C36 MILLION SUBSCRIPTION RECEIPT OFFERING IN STEP TOWARD SHARE LISTING

Share:

Markham, Ontario, Sept. 04, 2018 (GLOBE NEWSWIRE) -- The Flowr Corporation ("Flowr" or the "Company") is pleased to announce that it has closed its offering (the "Offering") of subscription receipts of Flowr ("Subscription Receipts"), which was oversubscribed and raised approximately $C36 million.  The offering is a further step toward completing the Company's previously announced plan to effect a reverse takeover of The Needle Capital Corp. ("Needle"), which is anticipated to occur on or before September 10.  Further detail on the offering is below.

Flowr, through its subsidiaries, is a vertically-integrated cannabis company and Health Canada Licensed Producer that currently offers premium quality cannabis under the FlowrRx brand in the Canadian medicinal market.  The Company has agreements with several provinces to provide its Flowr brand premium cannabis for sale in province-controlled adult-use retail channels following the expected October 17, 2018 legalization of adult recreational use in Canada.

The primary use of proceeds from the offering will be funding the buildout of Flowr's 85,000 square foot Kelowna, BC cultivation facility.  The Kelowna facility, which is currently approximately 20% complete, is being built using proprietary designs and patent-pending growing systems that are expected to enable Flowr to grow ultra-clean, premium quality cannabis at scale and with high yields.  Flowr expects the facility to reach full capacity in 2019, targeted to be in excess of 12,000 kilograms annually. The Company is also building a 50,000 square foot research and development facility integrated into its Kelowna campus and funded through an exclusive alliance with the Hawthorne Gardening subsidiary of The Scotts Miracle-Gro Company (NYSE:SMG).

"Completing this oversubscribed offering is another exciting milestone on Flowr's journey to producing the finest cannabis experience in the world as well as an acknowledgement of investors' belief in our business model," said Vinay Tolia, Flowr's incoming Chief Executive Officer.  "Coming on the heels of obtaining our Health Canada sales licence, these funds will enable us to scale operations and provide consumers and patients with Flowr's clean, consistent, premium-quality product in the medicinal and adult-use markets."

About the Offering

In aggregate, 13,807,734 Subscription Receipts were sold under the Offering at a subscription price of $2.60 per Subscription Receipt for aggregate gross proceeds of $35,900,104.  The Offering was comprised of both a brokered and a non-brokered financing. The Subscription Receipts sold as part of the brokered financing were sold pursuant to the terms of an agency agreement dated August 28, 2018 among the Company, Needle, Clarus Securities Inc. and Eight Capital (the "Co-Lead Agents") on behalf of a syndicate of agents (together with the Co-Lead Agents, the "Agents").  All proceeds from the sale of the Subscription Receipts, less 50% of the commissions payable to the Agents and the Agents' expenses (the "Escrowed Funds"), have been placed in escrow pending the satisfaction of the Escrow Release Conditions (as defined below).

The Subscription Receipts were issued pursuant to a subscription receipt agreement (the "Subscription Receipt Agreement") among the Company, the Co-Agents, on behalf of the Agents and Computershare Trust Company of Canada, as subscription receipt agent.

Upon satisfaction or waiver of all conditions precedent to the proposed business combination transaction (the "Transaction") between the Company and Needle whereby Needle and Flowr will effect a transaction that will result in a reverse takeover of Needle by the shareholders of Flowr to ultimately form the resulting issuer (the "Resulting Issuer"), and the satisfaction of other customary conditions (the "Escrow Release Conditions"), each Subscription Receipt issued will be automatically converted into one (1) common share of Flowr ("Flowr Share") without any further consideration on the part of the purchaser.  Subject to applicable laws and the policies of the TSX Venture Exchange (the "Exchange"), it is anticipated that, upon completion of the Transaction, each Flowr Share issued pursuant to the Offering will be exchangeable into one (1) freely tradable common share of the Resulting Issuer ("Resulting Issuer Share").

The Company and Needle are currently working on the documentation to complete the Transaction, which is expected to close on or prior to September 10, 2018

In consideration of the services provided by the Agents in connection with the Offering, the Company has paid the Agents a cash commission equal to 6% of the gross proceeds of the Offering (and reduced to 3% on the president's list orders and 1% for the lead order) ("Agents' Commission") and has issued the Agents broker warrants (the "Broker Warrants") equal to 3% of the total Subscription Receipts sold in the Offering (and reduced to 1.5% on the president's list orders).  Provided the Escrow Release Conditions are satisfied, each Broker Warrant will entitle the holder thereof to purchase one Resulting Issuer Share at an exercise price of $2.60 per share for a period of 24 months following the closing of the Offering.

0_medium_Flowr_Logo.jpeg



The Company has placed 50% of the Agents' Commission in escrow, subject to the satisfaction or completion of the Escrow Release Conditions whereupon the Flowr Shares underlying the Subscription Receipts will be issued to the purchasers and the Escrowed Funds will be paid to Flowr and the balance of the Agents' Commission will be paid to the Agents.

Upon completion of the Transaction, it is intended that the net proceeds from the Offering will be used for facility expansion, marketing initiatives, capacity expansion, working capital and general corporate purposes.

All securities of Flowr issued pursuant to the Offering are subject to a hold period ending on the later of: (a) August 28, 2018; or (b) the date that Flowr becomes a reporting issuer pursuant to applicable securities laws.

Further Information

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 Flowr should be considered highly speculative.

About The Needle Capital Corp.

The Needle Capital Corp. is a CPC. The Company's principal business activity is to identify and evaluate opportunities for acquisition of assets or business. The Company was incorporated on June 1, 2016, 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

Forward-Looking Information

This news release contains certain forward-looking statements that reflect the current views or expectations of management of Flowr and Needle with respect to performance, business and future events, including but not limited to express or implied statements and assumptions regarding completion of the Transaction and the use of proceeds from the Offering. 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 the Exchange for the Transaction (which may be conditional upon amendments to the terms of the Transaction) or court approval of the Transaction; (ii) 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; (iii) new laws or regulations could adversely affect the Resulting Issuer's business and results of operations; and (iv) 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; 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.

Flowr cautions that the foregoing list of material factors is not exhaustive. When relying on Flowr's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Flowr 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 Flowr 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. Flowr does not undertake to update this information at any particular time except as required in accordance with applicable laws.

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.

# # #


Jim Walsh
The Flowr Corporation
+1-607-275-7141
jwalsh@flowr.ca

Bruce Dunbar
The Flowr Corporation
+1-917-756-4065
bdunbar@flowr.ca

Alex Dann
The Flowr Corporation
+1-416-464-4067
adann@flowr.ca

View Comments and Join the Discussion!