Flow Beverage Corp. Completes Additional Private Placement

Rhea-AI Summary

Flow Beverage Corp. raises $3.4 million through private placement to enhance profitability. The company secured funding to support working capital and growth initiatives until reaching profitability in Q4 2024. Recent agreements with Joyburst, BeatBox, and BioSteel are expected to boost revenue. Flow anticipates increased production capacity and operational improvements for higher profitability.

• $3.4 million in total private placement proceeds to help bridge Flow to profitability

TORONTO--(BUSINESS WIRE)-- Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) (“Flow” or the “Company”) today announced it has completed the previously announced additional non-brokered private placement of 5,577,000 subordinate voting shares (“SV Shares”) at a price of $0.28 per SV Share to RI Flow LLC (the “Investor”) for gross proceeds of $1,561,560 (the “Additional Offering”), following the initial closing on January 30, 2024 of the non-brokered private placement of 6,473,000 SV Shares at a price of $0.28 per SV Share to the Investor for gross proceeds of $1,812,440 (the “Initial Offering”). The Investor is affiliated with NFS Leasing Canada Ltd., a lender to Flow, and its founder Clifford L. Rucker.

The total proceeds raised from the Initial Offering and the Additional Offering are $3,374,000. This funding is expected to bridge Flow’s working capital and other capital requirements until it reaches profitability and cash flow positive results, which is currently expected for the three-month period ending October 31, 2024 (“Q4 2024”). Flow’s financial outlook has recently improved given $148 million in contracted revenue expected from the signing of co-manufacturing agreements with Joyburst, BeatBox and BioSteel, in addition to ongoing growth in Flow brand net revenue. Revenue from the Joyburst agreement began in February 2024, with commercial production for BeatBox and BioSteel beginning shortly thereafter.

“NFS and Cliff have been wonderful financial partners for Flow over the last six years. They have been an instrumental funding source for our working capital and capital expansion requirements, and we believe their investment in Flow’s equity demonstrates their confidence in our near term and long term prospects. We are currently installing our fourth production line at Aurora and expect a 25% increase in capacity beginning in fiscal Q2 2024. Once we are running at full capacity, we are expecting economies of scale in production that will allow for greater profitability for both Flow brand and co-pack production. In addition to the many other operational transformation initiatives we have to benefit from in fiscal 2024, we believe we are very close to a significant inflection point in our profitability,” said Nicholas Reichenbach, Flow’s founder and Chief Executive Officer.

Additional Offering Details

All SV Shares issued under the Additional Offering are subject to a four-month and one-day hold period in accordance with applicable Canadian securities laws and such other further restrictions as may apply under applicable foreign securities laws. The Additional Offering remains subject to the final approval of the Toronto Stock Exchange (“TSX”).

The gross proceeds from the Additional Offering will be used by the Company for working capital and general corporate purposes.

No securities regulatory authority has either approved or disapproved of the contents of this press release. This press release is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended, U.S. Securities Act or under any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons, absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Early Warning Disclosure

Prior to the Additional Offering, the Investor owned, or had control or direction over, 6,473,000 SV Shares, its affiliate NFS Leasing Canada Ltd. (“NFS Canada”) owned, or had control or direction over, warrants convertible into 5,345,380 SV Shares (the “Warrants”), and Clifford L. Rucker and NFS Leasing, Inc. (“NFS”) beneficially owned, or had control or direction over, all such securities, representing, on an undiluted basis, approximately 10.79% of the issued and outstanding SV Shares and 5.30% of the voting rights attached to all of the Company’s outstanding voting securities, and representing, on a partially diluted basis (assuming exercise of the Warrants), 18.09% of the issued ‎and outstanding SV Shares and 9.27% of the voting rights attached to all of the Company’s ‎outstanding voting securities (based upon 60,001,270 SV Shares and 6,214,566 multiple voting shares of the Company (the “MVS”) outstanding, each of which MVS entitles the holder to the voting rights of ten SV Shares).

With closing of the Additional Offering, the Investor owns, or has control or direction over, 12,050,000 SV Shares, its affiliate NFS Canada owns, or has control or direction over, the Warrants convertible into 5,345,380 SV Shares, and Clifford L. Rucker and NFS beneficially owned, or had control or direction over, all such securities, representing, on an undiluted basis, approximately 18.38% of the issued and outstanding SV Shares and 9.43% of the voting rights attached to all of the Company’s outstanding voting securities, and representing, on a partially diluted basis (assuming exercise of the Warrants), 24.53% of the issued and outstanding SV Shares and 13.07% of the voting rights attached to all of the Company’s outstanding voting securities (based upon 65,578,270 SV Shares and 6,214,566 MVS outstanding after giving effect to the Additional Offering).

Other Information

The SV Shares were acquired for investment purposes. Subject to various factors including, without limitation, Flow’s financial position, the price of SV Shares, market conditions, Clifford L. Rucker’s determinations from time to time as to whether the trading price of the SV Shares adequately reflects the value of the SV Shares in relation to the Company’s activities and future prospects, and other factors and conditions Clifford L. Rucker deems appropriate, the Investor (or an affiliate or associate thereof) may acquire additional SV Shares, or may dispose of any or all of its SV Shares or Warrants, from time to time through, among other things, the exercise of the Warrants and the purchase or sale of SV Shares on the open market or in private transactions or otherwise, on such terms and at such times as Clifford L. Rucker may deem advisable.

The Company’s head office is located at 155 Industrial Parkway South, Unit 7-10, Aurora, Ontario L4G 3G6; the Investor and Mr. Rucker are located at 500 Cummings Center, Suite 6050, Beverly, MA 01915; and NFS and NFS Canada are located at 900 Cummings Center, Suite 226-U, Beverly, MA 01915.

A copy of the report filed under applicable Canadian securities laws by the Investor in connection with the transactions referred to in this press release may be obtained from the Investor via email: legal@ruckerinv.com or telephone 774 233 8421, or on the SEDAR profile of the Company at: www.sedarplus.ca.

About Flow Beverage Corp.

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 naturally alkaline spring water in a recyclable and up to 75% renewable, plant-based pack. 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 naturally alkaline spring water, award-winning organic flavours, collagen-infused and vitamin-infused flavours in sizes ranging from 330-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 online at flowhydration.com and are sold at over 59,500 stores across North America.

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, including statements regarding the use of proceeds from the Additional Offering, Flow’s expectations regarding its anticipated revenue from new co-manufacturing agreements, improvement in financial outlook and achieving cash flow positive results 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 (“MD&A”) and consolidated financial statements and notes thereto as at and for the fiscal year ended October 31, 2023. Additional information about Flow is available on the Company’s profile on SEDAR+ at www.sedarplus.ca, 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/20240301701991/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 total amount raised by Flow Beverage Corp. through the private placement?

Flow Beverage Corp. raised a total of $3.4 million through a private placement.

Who purchased the subordinate voting shares in the private placement?

RI Flow LLC purchased 5,577,000 subordinate voting shares in the private placement.

What is the price per subordinate voting share in the private placement?

The price per subordinate voting share in the private placement was $0.28.

What are the expected outcomes of the funding secured by Flow Beverage Corp.?

The funding is expected to support working capital and capital requirements until the company reaches profitability in Q4 2024.

Which companies have signed co-manufacturing agreements with Flow Beverage Corp.?

Joyburst, BeatBox, and BioSteel have signed co-manufacturing agreements with Flow Beverage Corp.