Flow Beverage Corp. Closes US$2 million Private Placement of Secured Convertible Note

Rhea-AI Summary

Flow Beverage Corp has closed a US$2 million secured convertible note private placement with BeatBox Beverages, their co-packing partner. The note matures in 2029 with a 10% annual interest rate and is convertible to shares at $1.00 per share. The proceeds will fund expansion at Flow's Aurora facility, adding two production lines. Flow has amended its manufacturing agreement with BeatBox, extending it from five to six years and increasing minimum revenue from $115 million to $213 million. This expansion aims to meet increased co-manufacturing demand from BeatBox and accommodate Flow brand growth.

Positive

• Secured US$2 million in financing through convertible note
• Manufacturing agreement minimum revenue increased from $115M to $213M
• Contract term extended by one year
• Production capacity expansion with two new lines

Negative

• 10% annual interest rate on convertible note
• Potential share dilution if note converts at $1.00 per share

TORONTO--(BUSINESS WIRE)-- Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) (“Flow” or the “Company”) is pleased to announce the closing today of its previously announced private placement of a US$2 million secured convertible note (the “Note”) to BeatBox Beverages (“BeatBox”), Flow’s long-term co-packing partner of ready-to-drink alcohol beverages.

“The closing of this financing marks a significant step in our strategic partnership with BeatBox. BeatBox is a valued co-pack partner and the proceeds from the Note will help Flow add two lines at our Aurora production facility. Both Flow and BeatBox are scaling rapidly and we are very pleased to be deepening our relationship as both organizations pursue innovation and sustainability in the North American beverage industry,” said Nicholas Reichenbach, Founder and Chief Executive Officer of Flow.

The Note matures on October 25, 2029, bears interest at the rate of 10% per annum, which interest is payable quarterly in arrears, and is secured against the assets of Flow. The principal amount of the Note is convertible at any time at BeatBox’s option into subordinate voting shares of Flow (the “Shares”) at a conversion price of $1.00 per share. Flow can force the conversion of the principal amount of the Note if, at any time during the period which is one year from issuance and ending on the maturity date, the volume weighted average price of the Shares on the Toronto Stock Exchange is greater than $1.50 per Share for any five consecutive trading days.

The Company will use the proceeds from the issuance of the Note to fund the leaseholds and equipment necessary to expand capacity at Flow’s Aurora production facility.

The Company amended terms of its manufacturing agreement with BeatBox (the “Agreement”) on August 1, 2024, with the term of the Agreement extending from five to six years and the minimum total revenue under the Agreement increasing from $115 million to $213 million. Due to the increased production capacity requirements under the Agreement, Flow will be adding two production lines at its Aurora production facility. This expansion is to satisfy the increased demand for co-manufacturing from BeatBox, in addition to other co-manufacturing agreements recently announced, and to accommodate anticipated growth in the Flow brand.

The Note and the Shares issuable upon any conversion thereof are subject to a statutory four-month and one-day hold period under applicable Canadian securities laws, expiring on February 26, 2025.

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.

About BeatBox

BeatBox is the “Original Party Punch”, offering fun and nostalgic flavors in a sustainable and resealable package. With a deep passion for live music, its community of super fans, and creating fun, BeatBox has become the brand that’s bringing the party to the alcohol industry.

The journey began in 2012 in the live music capital of the world, Austin, TX, and the energy was contagious. So much so that BeatBox secured the largest investment in Shark Tank history from Mark Cuban, who “invested in BeatBox because at heart I'm a 25-year-old and saw that this is going to be a party phenomenon.”

BeatBox quickly built a team of beverage leaders helping to define a new category of “Party Punch.” BeatBox has an impressive roster of investors from the music and entertainment industry, including Mark Cuban, Rob Dyrdek, Party Favor, Louis The Child, Good Times Ahead, and many more.

BeatBox has become one of the fastest growing brands in the alcohol industry and the drink of choice for Millennial and Gen Z drinkers. Its passion for music, and connection to its consumers, has also made it the fastest growing and most engaged alcohol brand on social media. Like Mark said, “This is a company that sells fun, and if anyone ever asks what this brand is all about, tell them that BeatBox Brings the Party!”

For more information on BeatBox, please visit BeatBox’s website at: beatboxbeverages.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. 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.

This 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/20241031549002/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

What is the value and terms of Flow Beverage Corp's (FLWBF) convertible note with BeatBox?

Flow Beverage Corp issued a US$2 million secured convertible note to BeatBox, maturing in 2029, with 10% annual interest and convertible to shares at $1.00 per share.

How much did Flow Beverage Corp (FLWBF) increase its minimum revenue agreement with BeatBox?

Flow increased its minimum revenue agreement with BeatBox from $115 million to $213 million, while extending the contract term from five to six years.

What will Flow Beverage Corp (FLWBF) use the US$2 million convertible note proceeds for?

Flow will use the proceeds to fund leaseholds and equipment for expanding capacity at its Aurora production facility, adding two new production lines.