Flow Beverage Corp. Closes First Tranche of Private Placement of Convertible Debenture Units for CDN$1.73 Million

Rhea-AI Summary

Flow Beverage Corp (TSX:FLOW; OTCQX:FLWBF) has completed the first tranche of a non-brokered private placement, raising CDN$1.73 million through the issuance of convertible debenture units at CDN$10,000 per unit. The company aims to raise up to CDN$7 million in total through additional tranches.

Each unit includes a 12% unsecured convertible debenture convertible into subordinate voting shares at $0.41 per share, and 4,878 SVS purchase warrants. The debentures mature in three years and bear 12% annual interest. The company issued 843,855 warrants in this first tranche. The proceeds will be used for working capital and general corporate purposes.

Positive

• Secured CDN$1.73 million in immediate funding through convertible debenture units
• Potential to raise up to CDN$7 million in total through additional tranches
• 12% interest rate provides attractive terms for investors

Negative

• Potential dilution for existing shareholders through conversion of debentures and warrants
• High 12% interest rate indicates expensive financing terms for the company
• Mandatory conversion terms could force early conversion and dilution

TORONTO--(BUSINESS WIRE)-- Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) (“Flow” or the “Company”) today announced the closing of the first tranche of a non-brokered private placement offering (the "Private Placement") of unsecured convertible debenture units of the Company (collectively, the "Convertible Debenture Units"), in which it issued and sold 172.992 Convertible Debenture Units at a price of CDN$10,000 per Convertible Debenture Unit for gross proceeds of CDN$1.73 million. The Company intends to close the balance of the Private Placement for total gross proceeds of up to CDN$7,000,000 (including the first tranche) in one or more additional tranches on such date(s) as may be determined by the Company.

Each Convertible Debenture Unit was comprised of: (i) one 12% unsecured convertible debenture (each, a "Convertible Debenture") in the principal amount of CDN$10,000 convertible into subordinate voting shares of the Company (the "SVS" and each such SVS, a "Conversion SVS") at a conversion price of $0.41 per Conversion SVS (the “Conversion Price”); and (ii) 4,878 SVS purchase warrants (each, a "Warrant") each of which entitles the holder thereof to purchase one SVS (each, a "Warrant SVS") at a price of $0.41 per Warrant SVS for a period of three years. The Company issued 843,855 Warrants in the closing of the first tranche of the Private Placement.

The Convertible Debentures will mature three years from their date of issue (the "Maturity Date") and bear interest ("Interest") at a rate of 12% per annum, accruing from their date of issue and compounding annually, and payable in cash on the Maturity Date. The principal amount of the Convertible Debentures will not be repaid in cash and will be repaid on the Maturity Date by the Company issuing a number of Conversion SVS equal to the sum of the aggregate outstanding principal amount of the Convertible Debentures divided by the Conversion Price. The Company has an option but not an obligation to repay the principal amount of the Convertible Debentures in cash.

Beginning on the date that is six months from the issuance of the Convertible Debentures, the principal amount of the Convertible Debentures may be converted into Conversion SVS, in whole or in part, at the option of the holders of the Convertible Debentures at the Conversion Price. Holders converting their Convertible Debentures will receive accrued and unpaid interest on the principal amount of the Convertible Debentures converted for the period from and including the date of issue to, but excluding, the date of conversion, with such interest being accrued and compounded annually and paid on the Maturity Date.

Beginning on the date that is six months from the issuance of the Convertible Debentures, the Company may force the conversion of all of the outstanding principal amount of the Convertible Debentures at the Conversion Price if the daily volume weighted average trading price of the SVS on the Toronto Stock Exchange (the “TSX”) exceeds $0.85 for at least five consecutive trading days (the “Mandatory Conversion”). Upon Mandatory Conversion, holders of the Convertible Debentures will receive accrued and unpaid interest on the principal amount of the Convertible Debentures converted for the period from and including the date of issue to, but excluding, the date of the Mandatory Conversion, with such interest being accrued and compounded annually and paid on the Maturity Date.

Provided that no event of default has occurred under the Convertible Debentures which is continuing, the Company has the right to redeem the whole or any portion of the outstanding principal amount of the Convertible Debentures without any premium or penalty at a redemption price equal to the outstanding principal amount under the Convertible Debentures, together with interest on the principal amount so redeemed accrued and unpaid to the date fixed for redemption.

The Warrants include a mandatory exercise provision whereby, if at any time following the date that is six months from the issuance of the Warrants and prior to the expiry date of the Warrants, the closing trading price of the SVS exceeds $0.85 for five consecutive trading days on the TSX, the Company may force the exercise of all the then unexercised Warrants and require the holders of the Warrants to exercise their Warrants in whole.

The Convertible Debentures, the Warrants, the Conversion SVS and the Warrant SVS are subject to a statutory hold period of four months and one day from the date of issuance of the Convertible Debenture Units ending on May 1, 2025.

The proceeds of the Private Placement will be used for working capital and general corporate purposes. The Private Placement remains subject to final approval by the TSX.

This news 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. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "1933 Act") and may not be offered or sold to, or for the account or benefit of, persons in the United States or "U.S. persons" (as such term is defined in Regulation S under the 1933 Act) absent registration or an applicable exemption from the registration requirements of the 1933 Act and any applicable state securities laws.

The TSX does not accept responsibility for the adequacy or accuracy of this release and has neither approved nor disapproved the contents of this press release.

About Flow

Flow is one of the fastest-growing premium water companies in North America. Founded in 2014, Flow’s mission since day one has been to reduce environmental impacts by providing sustainably sourced natural mineral spring water in the most sustainable product formats. Today, the brand is B-Corp Certified with a best-in-class score of 126.5, offering a diversified line of health and wellness-oriented beverage products: original mineral spring water, award-winning organic flavours and sparkling mineral spring water in sizes ranging from 300-ml to 1-litre. All products contain naturally occurring electrolytes and essential minerals and support Flow’s overarching purpose to “bring wellness to the world through the positive power of water.” Flow beverage products are available at retailers in Canada and the United States, and online at flowhydration.com.

For more information on Flow, please visit Flow’s investor relations site at: investors.flowhydration.com.

Forward-Looking Statements

This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws (“Forward-Looking Statements”). The Forward-Looking Statements contained in this press release relate to future events or Flow’s future plans, operations, strategy, performance or financial position and are based on Flow’s current expectations, estimates, projections, beliefs and assumptions, including, among other things, the intention to close additional tranches of the Private Placement, the total proceeds intended to be raised in the Private Placement and the allocation of the use of proceeds from the Private Placement. Such Forward-Looking Statements have been made by Flow in light of the information available to it at the time the statements were made and reflect its experience and perception of historical trends. All statements and information other than historical fact may be forward‐looking statements. Such Forward‐Looking Statements are often, but not always, identified by the use of words such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “expect”, “believe”, “anticipate”, “estimate”, “will”, “potential”, “proposed” and other similar words and expressions.

Forward-Looking Statements are based on certain expectations and assumptions and are subject to known and unknown risks and uncertainties and other factors, many of which are beyond Flow’s control, that could cause actual events, results, performance and achievements to differ materially from those anticipated in these Forward-Looking Statements. Forward-Looking Statements are provided for the purposes of assisting the reader in understanding Flow and its business, operations, prospects, and risks at a point in time in the context of historical and possible future developments, and the reader is therefore cautioned that such information may not be appropriate for other purposes. Forward-Looking Statements should not be read as guarantees of future performance or results. Readers are cautioned not to place undue reliance on these Forward-Looking Statements, which speak only as of the date of this press release. Unless otherwise noted or the context otherwise indicates, the Forward-Looking Statements contained herein are provided as of the date hereof, and the Company disclaims any intention or obligation, except to the extent required by law, to update or revise any Forward-Looking Statements as a result of new information or future events, or for any other reason.

The following press release should be read in conjunction with the management’s discussion and analysis and consolidated financial statements and notes thereto as at and for the three and nine months ended July 31, 2024. Additional information about Flow is available on the Company’s profile on SEDAR+ at www.sedar.com, including the Company’s Annual Information Form for the year ended October 31, 2023 dated January 29, 2024.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241231444255/en/

Trent MacDonald, Chief Financial Officer

1-844-356-9426

investors@flowhydration.com

Investors:

Marc Charbin

investors@flowhydration.com

Media:

Natasha Koifman

nk@nkpr.net

Source: Flow Beverage Corp.

FAQ

How much did Flow Beverage (FLWBF) raise in the first tranche of its private placement?

Flow Beverage Corp raised CDN$1.73 million in the first tranche of its private placement through convertible debenture units.

What is the conversion price for FLWBF's new convertible debentures?

The conversion price for Flow Beverage's convertible debentures is $0.41 per subordinate voting share.

What is the interest rate on FLWBF's new convertible debentures?

The convertible debentures bear interest at a rate of 12% per annum, compounding annually.

What is the maturity period for FLWBF's convertible debentures issued in January 2024?

The convertible debentures have a maturity period of three years from their date of issue.

How many warrants did FLWBF issue in the first tranche of the private placement?

Flow Beverage Corp issued 843,855 warrants in the first tranche of the private placement.