Flower One Announces Pricing of Up to $20 Million Public Offering of Convertible Debenture Units

Flower One Holdings Inc. (“Flower One” or the “Company”) (CSE:FONE, OTCQX:FLOOF) is pleased to announce the price and terms of its marketed public offering previously announced on November 4, 2019 (the “Offering”). The Offering will be conducted on an agency basis for the issuance of up to 20,000 convertible debenture units (the “Debenture Units”) of the Company at a price of $1,000 per Debenture Unit for aggregate gross proceeds to the Company of up to $20,000,000.

The Offering is being led on a “best-efforts” basis by Mackie Research Capital Corporation and Canaccord Genuity Corp., as co-lead agents and joint bookrunners (collectively, the “Lead Agents”), and on behalf of a syndicate of agents, including Industrial Alliance Securities Inc., Haywood Securities Inc., PI Financial Corp., Eight Capital, and Echelon Wealth Partners Inc. (together with the Lead Agents, the “Agents”).

Each Debenture Unit will consist of one 9.5% unsecured convertible debenture (the “Convertible Debentures”) with a maturity date of 3 years from the date of Closing (as defined herein) and 666 common share purchase warrants of the Company (the “Warrants”).

Each Warrant entitles the holder thereof to acquire one common share in the capital of the Company (a “Common Share”) at an exercise price equal to $1.55 (the “Exercise Price”) at any time up to 36 months following the Closing Date (as defined herein), subject to adjustment in certain customary events. Provided that if, at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares on the Canadian Securities Exchange (“CSE”), or other principal exchange on which the Common Shares are listed, is greater than $3.10 for 20 consecutive trading days, the Company may, within 10 business days of the occurrence of such event, deliver a notice to the holders of Warrants accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice (the “Accelerated Exercise Period”). Any unexercised Warrants shall automatically expire at the end of the Accelerated Exercise Period.

The principal amount of each Convertible Debenture (the “Principal Amount”) shall be convertible, for no additional consideration, into Common Shares at the option of the holder at any time prior to the earlier of: (i) the close of business on the Maturity Date, and (ii) the business day immediately preceding the date specified by the Company for redemption of the Convertible Debentures upon a Change of Control (as further described herein) at a conversion price equal to $1.50 (the “Conversion Price”). If the holder elects to convert the Convertible Debentures after January 15, 2020, then the holder will also receive the Effective Interest (as defined herein), payable in cash or Common Shares at a price equal to the daily volume weighted average trading price of the Common Shares on the CSE for the consecutive 20 trading days preceding the date of such election, or a combination of cash and Common Shares, at the Company’s option. The effective interest (“Effective Interest”) is an amount equal to the interest that the holder would have received if the holder had held the Convertible Debentures until the Maturity Date.

The Company may force the conversion of the principal amount of the then outstanding Convertible Debentures at the Conversion Price on not more than 60 days’ and not less than 30 days’ notice should the daily volume weighted average trading price of the Common Shares be greater than $2.25 for the consecutive 20 trading days preceding the notice.

The Company will also grant the Agents an option (the “Over-Allotment Option”) to cover over-allotments and for market stabilization purposes, exercisable at any time up to 30 days subsequent to the closing of the Offering, to increase the size of the Offering by up to 15% in Debenture Units (or the components thereof) on the same terms and conditions of the Offering, exercisable in whole or in part.

The Company intends to use the net proceeds from the Offering: (a) to advance and support the continued launch of its Brand Partners’ products into the Nevada market; (b) for working capital and general corporate purposes; and (c) to accelerate the Company’s market entry plans for California.

The closing of the Offering is currently expected to be on or about the week of November 11, 2019 (the “Closing” or the “Closing Date”) and is subject to certain conditions, including, but not limited to, the receipt of all necessary regulatory approvals including the approval of the CSE.

Flower One will use commercially reasonable efforts to obtain the necessary approvals to list the Convertible Debentures, the Warrants, and the common shares of the Company issuable upon conversion of the Convertible Debentures and the exercise of the Warrants on the CSE.

Upon a change of control of the Company, holders of the Convertible Debentures will have the right to require the Company to repurchase their Convertible Debentures, in whole or in part, on the date that is 30 days following the giving of notice of the change of Control, at a price equal to 101% of the principal amount of the Convertible Debentures then outstanding plus accrued and unpaid interest thereon (the “Offer Price”). If 90% or more of the principal amount of the Convertible Debentures outstanding on the date of the notice of the change of Control have been tendered for redemption, the Company will have the right to redeem all of the remaining Convertible Debentures at the Offer Price.

Copies of the base shelf prospectus and, any supplement thereto to be filed in connection with the Offering, can be found on SEDAR at www.sedar.com.

The Debentures Units (and the Convertible Debentures and the Warrants forming part of the Debenture Units and the common shares to be issued on conversion of the Convertible Debentures and on exercise of the Warrants) have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and may not be offered or sold in the United States, or to or for the account or benefit of, persons in the United States or U.S. Persons (as defined in Regulation S under the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Debenture Units in any jurisdiction in which such offer, solicitation or sale would be unlawful.

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. Flower One’s flagship 400,000 square-foot greenhouse and 55,000 square-foot production facility is used for large scale cannabis cultivation, processing, and manufacturing. Flower One also owns and operates a second production facility in Las Vegas, with 25,000 square-feet of indoor cultivation and a commercial kitchen that will produce several of the nation’s top-performing edible and beverage brands. Flower One produces a wide range of products ranging from wholesale flower, full-spectrum oils, and distillates to finished consumer packaged goods including flower, pre-rolls, concentrates, edibles, beverages, and topicals for the top-performing brands in cannabis.

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

Forward Looking Statements

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, statements relating to the Company’s ability to close the Offering, to gain access to further capital, to advance and support the continued launch of its Brand Partners’ products into the Nevada market, to accelerate the Company’s market entry plans for California, or to list the Convertible Debentures, the Warrants, and the common shares of the Company issuable upon conversion of the Convertible Debentures and the exercise of the Warrants on the CSE; the Company’s leadership as a cannabis cultivator, producer and full-service brand fulfillment partner; the Company’s ability to offer consistent, reliable and scalable fulfilment to its brand partners; and the production of a wide range of products including products of the top-performing edibles and beverage brands in the United States.

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 Shelf Prospectus dated September 27, 2019 filed on its issuer profile on SEDAR at www.sedar.com.

The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement, the “Cautionary Statement regarding Forward-Looking Information” section contained in the Shelf Prospectus. 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 Shelf Prospectus.

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: dependence on obtaining regulatory approvals; 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 Holdings 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.

Click here to connect with Flower One Holdings Inc. (CSE:FONE; OTC:FLOOF) for an Investor Presentation.

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