Flow Beverage Corp. Enters into Manufacturing Agreement with BeatBox, With the Potential to Deliver up to $115 million in Revenue Throughout the 5-year Term

Rhea-AI Summary

Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) announced a 5-year manufacturing agreement with BeatBox Beverages to produce and package alcoholic beverages. The agreement includes a commitment for BeatBox to purchase certain minimum annual volumes, equating to approximately $115 million in revenue over the life of the agreement. Flow will increase the capacity of its Aurora production facility to fulfill the agreement, including the addition of a fourth production line and further equipment financing with NFS Leasing. Additionally, Flow has entered into a $5,000,000 senior secured term loan with NFS Leasing to support the company’s capital expenditure and working capital requirements.

• Flow enters market for co-packaging of alcohol-based beverages
• Manufacturing agreement between Flow and BeatBox has five-year term with contractual take-or-pay commitments
• Flow to increase capacity of Aurora production facility to fulfill the manufacturing agreement through the addition of a fourth production line and further equipment financing with NFS Leasing
• Additionally, Flow enters into a $5,000,000 senior secured term loan with NFS Leasing to support the Company’s capital expenditure and working capital requirements

TORONTO--(BUSINESS WIRE)-- Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) (“Flow” or the “Company”) announced today that it has entered into a manufacturing agreement (the “Agreement”) with BeatBox Beverages (“BeatBox”), known as “The World’s Tastiest Party Punch,” whereby Flow will manufacture and package BeatBox’s innovative line of Party Punch alcoholic beverages. The Agreement has a term of five years, with commitments for BeatBox to purchase certain minimum annual volumes (the “Minimum Annual Volumes") which, in the aggregate, equate to approximately $115 million in revenue over the life of the Agreement. Additionally, the Agreement has a take-or-pay provision requiring that BeatBox pay Flow the equivalent of 85% of the value of the difference between the applicable Minimum Annual Volume and the actual volume purchased during the relevant 12-month period.

The production is expected to commence between May and July 2024, and is subject to Flow achieving certain pre-production requirements, including Flow making modifications to and retrofitting its Aurora production facility, while also obtaining the necessary governmental permits and authorizations. To help fulfill its commitment to the new partnership between Flow and BeatBox, to support growth in its co-packing operations generally and as required for production to commence and take-or-pay commitments to come into force under the Agreement, Flow will be installing a new TetraPak^® production line dedicated to alcohol production at its Aurora production facility. Under the terms of the Agreement, BeatBox will be responsible for compliance with all legal and regulatory obligations in connection with the marketing, distribution and commercialization of the alcohol-based products.

Nicholas Reichenbach, Founder and Chief Executive Officer of Flow, stated, “We are highly aligned with the team at BeatBox with our shared commitment to sustainable operations and we look forward to a long-term partnership. This is a significant agreement for Flow as we are meaningfully increasing our co-packaging operations, expanding the capacity of our Aurora production facility and diversifying our co-packing services to include alcoholic beverages. We believe that this agreement also directly supports the valuation of our Aurora production facility as we continue to consider options for its divestiture.”

Founded in 2012, BeatBox products are located in over 83,000 stores across North America. The “World’s Tastiest Punch” is available in nine nostalgic wine-based or malt-based flavours and contains low sugar, low carbs and low calories, all while delivering an 11.1% ABV “punch.” BeatBox is committed to eco friendly operations through its alignment with CarbonBetter, Plastic Neutral and as a recent B Corp Certified company.

Aimy Steadman, co-founder and COO of BeatBox, states, "BeatBox is experiencing rapid growth as a leading alcohol brand utilizing Tetra Pak’s 500ml packaging. We are pleased to announce our strategic partnership with Flow, which will bolster our production capacity throughout 2024 and beyond. This collaboration reflects our shared commitment to sustainability, as evidenced by both of our companies holding B Corp certification. Through this partnership, we remain dedicated to reshaping the Ready-to-Drink category in accordance with our distinct 'BeatBox Way' corporate values.”

Equipment Financing and Senior Secured Loan

NFS Leasing Canada Ltd. ("NFS"), a committed partner in growth, has extended its support to Flow by providing equipment financing for up to $11.4 million. This financing allows Flow to add a fourth production line and increase capacity for the Aurora production facility. In addition, for general corporate purposes, Flow has entered into an interim loan financing agreement in the form of a $5,000,000 senior secured loan with NFS with a maturity date of May 13, 2024, which bears interest at the rate of 2% per month.

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 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 59,000 stores across North America.

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

About BeatBox

United through a love of music and inspired by the entrepreneurial spirit of Austin, Texas, the founders of BeatBox Beverages set out to create something that could help everyone #PartyBetter. One year later, they made Shark Tank, walking away with the biggest investment the show had made at that time, $1 million from Mark Cuban. Later adding on a team of industry veterans from InBev, MillerCoors, Deep Eddy, and Tito's Handmade Vodka, to name a few – who know how to develop, launch, and quickly grow authentic brands. Boasting a roster of investors including Mark Cuban, Rob Dyrdek as well as DJs Party Favor, Louis The Child, Good Times Ahead, and many others. BeatBox Beverages' reputation is secured as a company that creates products that drive incremental profit in high-growth categories.

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

About NFS Leasing, Inc.

NFS Leasing is a privately-held independent equipment finance leader with more than 16 years of experience. NFS Leasing is a story lender and provides flexible equipment financing and secured loans to small and middle market companies in the U.S. and Canada. NFS uses its own balance sheet capital and provides customized solutions supporting emerging, turnaround, and established businesses. NFS Leasing is proud to have created thousands of jobs and infused over $1,000,000,000 of capital into businesses. Contact NFS today and tell us your story at www.nfsleasing.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 may include, but are not limited to, statements and comments with respect to the production start date under the Agreement, the ability of and the timing for Flow to complete the various pre-production requirements, including finalizing the modifications to the Aurora facility and the implementation of the fourth production line and obtaining the required governmental permits and authorizations, the performance of the parties’ respective obligations under the Agreement , the expected revenues to be generated from the Agreement, the potential divestiture of the Aurora facility, the impact of the Agreement on the value of the Aurora facility in the context of a divestiture, as well as other 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”, “commence”, “expect”, “believe”, “anticipate”, “estimate”, “will”, “potential”, “proposed” and other similar words and expressions.

Specific Forward-Looking Statements contained in this news release include, but are not limited to, statements regarding Flow’s business strategy or outlook and future growth plans, expectations regarding the elevated pace of revenue growth, potential operational efficiencies to be realized and anticipation of profitability.

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 (“MD&A”) and consolidated financial statements and notes thereto as at and for the three and nine months ended July 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, 2022 dated January 29, 2023.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231116014420/en/

Flow:

Trent MacDonald, Chief Financial Officer and EVP Operations

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 manufacturing agreement between Flow and BeatBox Beverages?

The manufacturing agreement is a 5-year deal for Flow to produce and package BeatBox's line of Party Punch alcoholic beverages, with a commitment for BeatBox to purchase certain minimum annual volumes.

What is the capacity expansion plan for Flow's Aurora production facility?

Flow will add a fourth production line and further equipment financing with NFS Leasing to increase the capacity of its Aurora production facility.

What financing agreements has Flow entered into with NFS Leasing?

Flow has entered into equipment financing for up to $11.4 million and a $5,000,000 senior secured term loan with NFS Leasing to support capital expenditure and working capital requirements.

What are some key details about BeatBox Beverages?

BeatBox products are available in over 83,000 stores across North America, offering nostalgic wine-based or malt-based flavors with low sugar, low carbs, and low calories, and an 11.1% ABV.

What is the commitment of BeatBox and Flow to sustainability?

Both companies hold B Corp certification and are committed to eco-friendly operations, with BeatBox's alignment with CarbonBetter and Plastic Neutral.