Flower One Issues Common Shares to Its Term Lender Per the Term Loan Modification Agreement

Rhea-AI Summary

Flower One Holdings Inc. announced the issuance of 1,996,742 common shares to RB Loan Portfolio II, LLC as part of a loan modification agreement concerning a USD$30 million term debt. The modifications include extending the loan maturity from June 27, 2021 to December 21, 2021 and adjusting the interest rate to 14%. The shares were issued at a deemed price of CAD$0.2065, subject to a six-month lock-up. Flower One is a major cannabis cultivator in Nevada, focusing on providing fulfillment services for top cannabis brands.

Positive

• Modification of loan terms offers extended maturity date to December 21, 2021.
• Company maintains strong position as a leading cannabis cultivator in Nevada.

Negative

• Interest rate increased to 14%, raising borrowing costs.
• Exit fee of USD$1 million payable upon loan maturity may impact cash flow.

Flower One Holdings Inc. (“Flower One” or the “Company”) (CSE: FONE) (OTCQX: FLOOF) (FSE: F11), a leading cannabis cultivator and producer in Nevada, is pleased to announce the issuance on April 7, 2021 of 1,996,742 common shares (“Shares”) to RB Loan Portfolio II, LLC, a Delaware limited liability company (the “Term Lender”) and its respective loan participants, pursuant to the terms of the previously signed loan modification agreement (the “Loan Modification Agreement”).

As previously announced on January 26, 2021, the Company and its various subsidiaries entered into the Loan Modification Agreement with the Term Lender with respect to its existing USD$30 million term debt, secured by the facility at 3950 N. Bruce St., North Las Vegas, NV. Pursuant to the Loan Modification Agreement, the Term Lender agreed to forbear certain existing events of default under, and to make certain modifications to, the existing term loan and financing documents which included, among other things, (i) the extension of the maturity date from June 27, 2021 to December 21, 2021, (ii) modification of the interest rate to 14%, with 12% paid monthly and 2% paid at maturity, (iii) the addition of an exit fee of USD$1,000,000 payable upon payment in full of the term loan on the maturity date, and (iv) a loan modification fee equal to 3% per annum on the outstanding principal of the Term Loan from May 19, 2020 until the effective date of the Loan Modification Agreement (January 26, 2021).

In accordance with the terms of the Loan Modification Agreement, the Company has issued 1,996,742 Shares (subject to a six-month lock-up agreement) at a deemed price of CAD$0.2065 per Share to the Term Lender in satisfaction of such modification fee payable to the Term Lender pursuant to the Loan Modification Agreement.

About Flower One Holdings Inc.

Flower One is the largest cannabis cultivator, producer, and full-service brand fulfillment partner in the state of Nevada. By combining more than 20 years of greenhouse operational excellence with best-in-class cannabis operators, Flower One offers consistent, reliable, and scalable fulfillment to a growing number of industry-leading cannabis brands (Cookies, Kiva, 22Red Old Pal, Heavy Hitters, Lift Ticket’s, Huxton, The Clear, and Flower One’s leading in-house brand, NLVO, and more). Flower One currently produces a wide range of products from flower, full-spectrum oils, and distillates to finished consumer packaged goods, including a variety of: pre-rolls, concentrates, edibles, topicals, and more for top-performing brands in cannabis. Flower One’s Nevada footprint includes the Company’s flagship facility, a 400,000 square-foot high-tech greenhouse and 55,000 square-foot production facility, as well as a second site with a 25,000 square-foot indoor cultivation facility and commercial kitchen. Flower One has built an industry-leading team focused on becoming the first high-quality, low-cost brand fulfillment partner.

The Company’s common shares are traded on the Canadian Securities Exchange under the Company’s symbol “FONE”, in the United States on the OTCQX Best Market under the symbol “FLOOF” and on the Frankfurt Stock Exchange under the symbol “F11”. For more information, visit: https://flowerone.com.

Cautionary Note Regarding Forward-Looking Information 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 actual 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.

Forward-looking statements may include, without limitation, the payment of an exit fee on the maturity date; the Company’s leadership as a cannabis cultivator, producer, innovator and full-service brand fulfillment partner; the Company’s ability to offer consistent, reliable and scalable fulfilment to a growing number of industry-leading brand partners; and the production of a wide range of products for the nation’s top-performing brands.

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 Company’s business are contained under the heading "Risk Factors" in the Company’s management’s discussion and analysis for the nine and three months ended September 30, 2020 (the "MD&A").

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 MD&A. All forward-looking statements in this press release are made as of the date of this press release. 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 MD&A.

Although Flower One 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: 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.

Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. Flower One disclaims and does not undertake any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR THEIR REGULATIONS SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210408005315/en/

FAQ

What are the details of the loan modification for Flower One Holdings?

The loan modification extends the maturity date to December 21, 2021, modifies the interest rate to 14%, and includes an exit fee of USD$1 million.

How many shares did Flower One issue to the Term Lender?

Flower One issued 1,996,742 common shares to RB Loan Portfolio II, LLC as part of the loan modification agreement.

What is the significance of the shares issued to the Term Lender?

The shares were issued as a modification fee for enhancing the loan terms, affecting the company's equity structure.

What is the effect of the new interest rate on Flower One's finances?

The new interest rate of 14% increases Flower One's borrowing costs compared to previous terms.

What does the loan modification mean for Flower One's future?

The modification provides temporary financial relief but increases long-term costs due to higher interest and exit fees.