Flower One Raises $50 Million in Convertible Note Offering

Flower One Announces Closing of $50.0 Million Public Offering

TORONTO, March 28, 2019 (GLOBE NEWSWIRE) — Flower One Holdings Inc. (the “Company”) (CSE: FONE) (OTCQB: FLOOF), a leading cannabis cultivator, producer and innovator in Nevada, is pleased to announce the closing of its previously announced overnight marketed public offering (the “Offering”) of unsecured convertible debenture units of the Company (the “Debenture Units”) for aggregate gross proceeds of $50,000,000. In connection with the Offering, the Company issued a total of 50,000 Debenture Units at a price of $1,000 per Debenture Unit (the “Offering Price”).

As part of the Offering, the Agents (as defined below) have been granted an over-allotment option (the “Over-Allotment Option”) for up to 30 days after the Closing in respect of: (i) additional Debenture Units (each an “Over-Allotment Unit”); (ii) additional Convertible Debentures (each an “Additional Debenture”) at a price of $824.51 per such Additional Debenture; (iii) additional Warrants (each an “Additional Warrant”) at a price of $0.9140 per Additional Warrant; or (iv) any combination thereof; provided that the aggregate number of Additional Debentures and Additional Warrants which may be issued under the Over-Allotment Option (including those comprising Over-Allotment Units) does not exceed 7,500 Additional Debentures or 1,440,000 Additional Warrants, respectively.

The success of this offering highlights the strong interest from investors and their increased confidence in the execution of our business model and strategy. This funding better positions Flower One to capitalize on the continued growth and opportunities in Nevada and solidify our initial entry into the U.S. cannabis market as we continue to develop our best-in-class production facility.

Ken Villazor, President and CEO of the Company

The Offering was completed pursuant to an agency agreement (the “Agency Agreement”) dated March 22, 2019 with Mackie Research Capital Corporation and Canaccord Genuity Corp. (collectively, the “Lead Agents”), on behalf of a syndicate of agents including Cormark Securities Inc., Eight Capital, Industrial Alliance Securities Inc., and PI Financial Corp. (together with the Lead Agents, the “Agents”).

The net proceeds received by the Company from the Offering are intended to be used for the payment of outstanding notes, ongoing construction and development of its Nevada production facility, working capital and general corporate purposes.

Each Debenture Unit consists of one 9.5% unsecured convertible debenture (the “Convertible Debentures”) maturing three years from the date of issuance and 192 common share purchase warrants of the Company (the “Warrants”). The Convertible Debentures shall bear interest at a rate of 9.5% per annum from the date of issue, payable semi-annually in arrears on the last day of June and December in each year and will have a maturity 36 months from the date of issuance (the “Maturity Date”). The principal amount of each Convertible Debenture shall be convertible, for no additional consideration, into common shares of the Company (“Common Shares”) at the option of the holder at any time prior to the earlier of: (i) the close of business on the Maturity Date, and (ii) the business day immediately preceding the date specified by the Company for redemption of the Convertible Debentures upon a change of control at a conversion price equal to $2.60 (the “Conversion Price”), subject to certain adjustment and acceleration provisions. Each Warrant shall entitle the holder thereof to purchase one Common Share at an exercise price of $2.60 at any time up to 36 months following Closing of the Offering.

Pursuant to the terms of the Agency Agreement, the Company paid the Agents a cash commission equal to 6.0% of the gross proceeds of the Offering, and issued to the Agents 999,936 non-transferable warrants (the “Broker Warrants”) of the Company, each such Broker Warrant exercisable into a Common Share at an exercise price of equal to the Conversion Price per Common Share exercisable at any time up to 36 months from the Closing Date.

The Convertible Debentures and the Warrants have been approved for listing with the Canadian Securities Exchange under the symbols FONE.DB and FONE.WT, respectively and will begin trading on the Closing Date.

The Offering is being made pursuant to a short-form prospectus filed in each of the provinces of Canada (except Québec), and otherwise by private placement exemption in those jurisdictions where the Offering can lawfully be made, including the United States. Neither the Debentures Units (and the Convertible Debentures and the Warrants forming part of the Debenture Units) have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and such securities may therefore not be offered or sold in the United States or to or for the account or benefit of a person in the United States or a U.S. Person (as defined in Regulation S of the U.S. Securities Act) absent registration or an exemption from the registration requirements including to Institutional Accredited Investors pursuant to Rule 506(b) of Regulation D of the U.S. Securities Act. 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 Debenture Units in any jurisdiction in which such offer, solicitation or sale would be unlawful. Three subscribers in the United Kingdom entered into a placing letter and settled 400 Debenture Units directly with the Company. In connection with this, the Agents received a cash compensation equal to 6.0% of the gross proceeds and no Broker Warrants. A copy of the short form prospectus dated March 22, 2019 is available under the Company’s profile on SEDAR at www.sedar.com.

About Flower One Holdings Inc.

Flower One is sharply focused on quickly becoming the leading cannabis cultivator, producer and innovator in the highly lucrative Nevada market. Flower One owns and operates a 25,000 square-foot cultivation and production facility in North Las Vegas, with nine grow rooms, and owns the established NLV Organics consumer brand of cannabis products. The Company is also rapidly converting its 455,000 square-foot greenhouse and production facility, which is the largest in the State of Nevada, for cultivating and processing high-quality cannabis at scale. Combined, the flagship greenhouse facility and production facility (once fully operational) and the North Las Vegas facility provide Flower One with 480,000 square feet of capacity for cultivation and processing, production and high-volume packaging of dry flower, cannabis oils, concentrates and infused products. The Company is fully licensed for medical marijuana cultivation and production, as well as recreational marijuana cultivation and production in the state of Nevada and currently holds licensing agreements with their Brand Partners, Flyte Concentrates, Rapid-Dose Therapeutics’ Quick Strip, Old Pal, Palms, HUXTON, CannAmerica Brands and G Pen.

The Common Shares are traded on the Canadian Securities Exchange under the Company’s symbol “FONE” and in the United States on the OTCQB under the symbol “FLOOF.” For more information, visit: https://flowerone.com

Original press release

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Published by NCV Newswire
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