Markham, Ontario, Dec. 20, 2018 (GLOBE NEWSWIRE) --
Transaction Highlights
Terms and License Agreement:
- Flowr acquires 19.8% of Holigen.
- Enters into an exclusive termed IP licensing agreement which is expected to significantly accelerate the completion of
Holigen’s construction and licensing projects.
- Cash payment of C$6 million.
Massive Scale: Holigen is in the final stages of obtaining a license for one of the most significant
cultivation facilities in the developed world which includes an outdoor cultivation license allowing a potential 500,000 kgs of
annual capacity on 65 hectares.
Low Production Costs: Large scale outdoor production in Portugal could produce one of the lowest cost
cultivation opportunities in the world given Portugal’s climate and workforce in combination with Flowr’s cultivation
expertise.
Global Distribution: Holigen is in the final stages of obtaining a license in Portugal allowing export
of low-cost cannabis products, providing direct access to EU markets as well as global exports.
Growing Network: Holigen is forming partnerships with major distributors serving Germany, Poland, UK and
Ireland and has strong ties to the largest medical cannabis distributor in Australia with distribution channels across 35
countries.
Opportunity: Currently 22 countries in Europe have medical cannabis programs. By 2028, Europe’s medical cannabis market is
projected to grow to over C$84 billion and Australia’s cannabis market to over C$11 billion (Source: Prohibition Partners)
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“We believe this is a transformative transaction that establishes Flowr as a global player in the cannabis industry,” said
Vinay Tolia, Co-CEO of The Flowr Corporation. “We’re using our financial strength and industry-leading cultivation expertise
to gain exposure to the rapidly expanding European and Australian markets through Holigen.”
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The Flowr Corporation (“Flowr” or “the Company”) (TSX.V: FLWR; OTC: FLWPF), a Canadian Licensed Producer of
premium cannabis products, announced today it has acquired a 19.8% interest in Holigen Limited (Holigen). Flowr will provide,
among other things, its cultivation, facility design and construction IP for use by Holigen in the construction of its facilities
in Portugal and Australia and for obtaining its final licenses in those territories.
Significant Cultivation Facilities, Potential Low-Cost Production
Holigen is a European-based cannabis company in the process of developing large-scale cannabis cultivation facilities and
Good Manufacturing Process (GMP) compliant production facilities that are expected to provide finished medical cannabis products,
pharmaceutical ingredients, and plants and seeds to medical cannabis markets globally. Holigen is in the final stages of obtaining
one of the largest cultivation licenses in the developed world for outdoor and greenhouse facilities on 72 hectares (7.8 million
square feet) in Portugal. This project has been designated a Project of National Interest by the Portuguese government, which
ensures special handling and prioritization by government agencies and access to low cost financing.
Benefitting from Portugal’s climate, cost-effective land and labour, and the high crop yields it expects to generate by
employing Flowr’s cultivation IP, Holigen could be among the lowest cost producers in the world.
“The combination of Holigen’s strong management team and incredible assets along with our cultivation, design and construction
IP will create what we believe will be a worldwide leader in production” said Tom Flow, Co-CEO of Flowr.
Licensing Near Completion, GMP Certification Expected
Holigen expects to complete its licensing process for its first site in Portugal by mid-2019 and expects to be one of the few
licensed producers in Europe that will produce products in GMP-compliant facilities.
Holigen has applied for licenses to cultivate, manufacture, distribute, import and export medical cannabis and derived products
at two sites. These applications were considered compliant with local regulations by the health authorities in Portugal
(INFARMED). Both sites are pending inspections to complete the licensing process. Holigen anticipates licenses to be
granted for site 1 by Q2 2019 and site 2 by early 2020. Its Australian facilities have already achieved GMP certifications
with respect to the relabeling and release of products. As the fit-out of the facility progresses, Holigen expects to arrange
further GMP inspections.
In Australia, Holigen has strong ties to the country’s largest distributor of medical cannabis and holds the following medical
cannabis licenses: Cultivation, R&D and Manufacturing from the Office of Drug Control and Drug Control Section Australia
(Therapeutic Goods Administration) and GMP License from the TGA. Holigen is in the process of obtaining a New South Wales
Schedule 8 pharmaceutical manufacturing license, which is the remaining license it requires.
Development Details
Holigen currently is developing four cultivation facilities in Portugal and Australia along with production and R&D
facilities. These sites include:
- A 65 hectare (seven million square foot) outdoor cultivation site in Portugal that is expected to be partly operational in
the second quarter of 2019 and fully operation in the first quarter of 2021 with potential production of more than 500,000 kg
annually;
- A 294,000 square foot greenhouse facility in Portugal that is expected to begin operating in the first quarter of 2020 with
potential production of 110,000 kg annually;
- An indoor facility in Portugal expected to begin production in mid-2019 with a potential capacity of approximately 3,500 kg
annually and the potential capacity to extract up to 49 tons of dried product;
- Approximately 90,000 square feet of planned GMP-compliant production facilities integrated into the Portuguese cultivation
centers; and,
- A 2.4 hectare site in Sydney suitable for cultivation and manufacturing, which includes a 3,500 square foot indoor
cultivation facility with a potential capacity of over 1,000 kg annually.
“We are delighted to be working with Flowr to develop these valuable properties and licenses into one of the leading cannabis
franchises in Europe and Australia,” said Pauric Duffy, Holigen’s Co-Founder. “In addition to developing the cultivation
facilities, we are hard at work developing medical cannabis brands in our key markets, preparing to leverage the distribution
partnerships we are forming, and evaluating alternative product lines like infused beverages.
“Flowr has the high quality, high yield growing technology and experience that we believe will quickly allow Holigen to execute
on the very significant licenses we hold and are obtaining in both Portugal and Australia,” said Peter Comerford, Holigen’s
Co-Founder. “With the partnerships we are developing, we believe we will be positioned perfectly within the Australian government’s
ambitious strategy for significant export of medicinal cannabis announced in January. With the licenses we are obtaining,
combined with Flowr’s proven cultivation technology, we believe this transaction places both companies in a unique position to act
as a true medicinal cannabis multinational.”
Holigen is led by Messrs. Duffy and Comerford and employs an operational team that includes seasoned pharmaceutical engineers
led by Aldo Vidinha. These proven leaders have experience building sizable companies and facilities around the world and in
the medical, manufacturing and pharmaceutical industries.
The closing of the transaction is subject to satisfaction of certain customary closing conditions (including any required stock
exchange approval).
About Flowr
The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF), through its subsidiaries, holds a cannabis production and sales license granted
by Health Canada. With a head office in Markham, ON and a production facility in Kelowna, BC, Flowr builds and operates
large-scale, GMP-designed cultivation facilities utilizing its own patented growing systems. Flowr’s investment in research
and development along with its sense of craftsmanship and a spirit of innovation is expected to enable it to provide
premium-quality cannabis that appeals to the adult-use recreational market and addresses specific patient needs in the medicinal
market.
For more information, visit www.flowr.ca Follow Flowr on Twitter: @FlowrCanada; Facebook: Flowr Canada; Instagram:
@flowrcanada; and LinkedIn: The Flowr Corporation.
On behalf of The Flowr Corporation:
Vinay Tolia
Co-Chief Executive Officer
Forward-Looking Information
This press release includes forward-looking information within the meaning of Canadian securities laws regarding Flowr, Holigen
and their respective businesses, which may include, but are not limited to: the transactions described herein, the production
capacity of Holigen, the cost of production of Holigen, the IP licensing agreement accelerating the completion of Holigen’s
construction and licensing projects, the scale of Holigen, including with respect to Holigen having one of the most significant
cultivation facilities in the development world, Portugal providing Holigen with the climate and workforce, in combination with
Flowr’s cultivation expertise, to produce one of the lowest cost cultivation operations, the status of Holigen’s licensing process,
including the timing of receipt of all required licenses, Holigen being able to export low-cost cannabis and having direct access
to EU markets and global markets, the partnerships Holigen is forming with distributors in Germany, Poland, the UK and Ireland, the
transaction proving to be transformative for Flowr, the use of Flowr’s financial strength and industry leading cultivation
expertise gaining it exposure to the European and Australian markets through Holigen, Holigen’s facilities, Holigen seeking to have
GMP compliant facilities, Holigen’s facilities producing finished medical cannabis products, pharmaceutical ingredients, plants and
seeds to the medical cannabis market globally, the combination of Holigen and Flowr creating a worldwide leader in production, the
dates for inspections and final granting of licenses for Holigen’s facilities and properties, Holigen seeking additional GMP
inspections in the future, the completion and operational dates for Holigen’s facilities and properties, including the timing
thereof, the production capacity of such facilities and properties, the extraction of dried flower at Holigen’s facilities, the
relationship between Flowr and Holigen creating a leading cannabis franchise in Europe and Australia, Holigen working to develop
medical cannabis brands, leveraging its distribution partnerships, and evaluating alternative product lines, such as infused
beverages, the partnership between Flowr and Holigen allowing Holigen to execute on the licenses it holds and is obtaining, Holigen
being perfectly positioned within the Australian government’s export strategy, the transaction placing both companies in a unique
position to act as a true medical cannabis multinational, Flowr’s investment in research and development along with its sense of
craftsmanship and spirit of innovation enabling it to provide premium-quality cannabis that appeals to the adult-use market and
addresses specific patient needs in the medicinal market and other factors. Often, but not always, forward-looking information can
be identified by the use of words such as “potential”, “plans”, “is expected”, “expects”, “scheduled”, “intends”, “contemplates”,
“anticipates”, “believes”, “proposes” or variations (including negative and grammatical variations) of such words and phrases, or
state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Such
statements are based on the current expectations of Flowr’s management and are based on assumptions and subject to risks and
uncertainties. Although Flowr’s management believes that the assumptions underlying these statements are reasonable, they may prove
to be incorrect. The forward-looking events and circumstances discussed in this press release may not occur by certain specified
dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting Flowr,
including risks relating to the failure to obtain regulatory approvals, the failure to complete the transaction described herein,
including as a result of certain conditions not being satisfied, risks relating to the use of Flowr’s or Holigen’s products, risks
relating to the markets in which Flowr and Holigen operate and/or distribute their respective products, possible failure to realize
the anticipated benefits of the transaction described herein, risks associated with the license agreement described herein,
including Holigen’s breach of such agreement or the infringement of third party IP rights, the reliance on information provided by
Holigen about its business and plans, risks associated with the transaction, including the inability of Holigen to complete its
licensing process or construct its facilities or properties as a result of a lack of funding, the production capacity of
Holigen being less than expected, thus impacting revenues and earnings, the cost of production of Holigen being more than expected,
resulting in lower earnings, the IP licensing agreement not accelerating the completion of Holigen’s construction and licensing
projects, the scale of Holigen not being as significant as described herein, Holigen not having one of the most significant
cultivation facilities in the development world, or competitors being able to construct and operate comparable facilities and
properties, Portugal and Flowr failing to provide Holigen with the climate, workforce and cultivation expertise, as applicable, to
produce one of the lowest cost cultivation operations, Holigen’s licensing process being delayed or not completed, Holigen not
being able to export low-cost cannabis and not having direct access to EU markets and global markets, which would materially impact
revenues and earnings, Holigen failing to form partnerships with distributors in Germany, Poland, the UK and Ireland, the
transaction not proving to be transformative for Flowr, Flowr’s financial strength and industry leading cultivation expertise and
partnership with Holigen not enabling Flowr to gain exposure to the European and Australian markets, risks associated with
Holigen’s facilities, Holigen not being able to construct and license GMP compliant facilities, which could impact the ability to
sell products where such compliance is required, Holigen’s facilities not producing finished medical cannabis products,
pharmaceutical ingredients, plants and seeds that can be distributed globally, the combination of Holigen and Flowr failing to
create a worldwide leader in production, the dates for inspections and final granting of licenses for Holigen’s facilities and
properties being delayed and/or not being completed, Holigen failing to complete, or failing to achieve the operational dates
for, its facilities and properties, the production capacity of such facilities and properties not being achieved, which could
materially impact the value of Holigen, the inability to extract dried flower at Holigen’s facilities, the relationship between
Flowr and Holigen failing to create a leading cannabis franchise in Europe and Australia, Holigen’s inability to develop medical
cannabis brands, leveraging its distribution partnerships, or evaluating alternative product lines, such as infused beverages, the
partnership between Flowr and Holigen not benefiting Holigen in executing on the licenses it holds and is obtaining, Holigen
failing to participate in the Australian government’s export strategy or being delayed in participating in such opportunity,
Holigen and Flowr not being in a unique position to act as a true medical cannabis multinational, Holigen’s inability to grow the
amount of cannabis described herein, which could adversely impact revenues, the fact that the facilities described herein may not
include all the elements described in this press release, which could adversely impact the partnership described herein, Flowr not
being able to sustain its competitive advantage in cultivation and being unable to remain at the forefront of industry innovation,
whether as a result of failed construction of the facilities described herein or otherwise, Flowr not being able to meet demand or
fulfill purchase orders, which could materially impact revenues and its relationships with purchasers, Flowr requiring additional
financing from time to time in order to continue its operations or assist Holigen with its licensing and construction projects, and
such financing may not be available when needed or on terms and conditions acceptable to the Company, new laws or regulations
adversely affecting the Company’s business and results of operations, results of operation activities and development of projects,
project cost overruns or unanticipated costs and expenses, the inability of Flowr’s products to be high quality, the inability of
Flowr to produce and distribute premium, high quality products, the inability to supply products or any delay in such supply,
Flowr’s securities, the inability to generate cash flows, revenues and/or stable margins, the inability to grow organically, risks
associated with fluctuations in exchange rates (including, without limitation, fluctuations in currencies), the cannabis industry
and the regulation thereof, the failure to comply with applicable laws, risks relating to partnership arrangements, possible
failure to realize the anticipated benefits of partnership arrangements, product launches (including, without limitation,
unsuccessful product launches), the inability to launch products, Flowr not being able to provide premium quality cannabis that
appeals to the adult-use market and addresses specific patient needs in the medicinal market, the failure to obtain regulatory
approvals, economic factors, market conditions, risks associated with the acquisition and/or launch of products, the equity and
debt markets generally, risks associated with growth and competition (including, without limitation, with respect to Flowr’s and
Holigen’s products), general economic and stock market conditions, risks and uncertainties detailed from time to time in Flowr’s
filings with the Canadian Securities Administrators and many other factors beyond the control of Flowr. Although Flowr has
attempted to identify important factors that could cause actual actions, events or results to differ materially from those
described in forward-looking information, there may be other factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking information can be guaranteed. Except as required by applicable securities
laws, forward-looking information speaks only as of the date on which it is made and Flowr undertakes no obligation to publicly
update or revise any forward-looking information, whether as a result of new information, future events, or
otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
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Jim Walsh The Flowr Corporation +1-607-275-7141 jwalsh@flowr.ca Bruce Dunbar The Flowr Corporation +1-917-756-4065 bdunbar@flowr.ca For Investors Only: Bram Judd The Flowr Corporation +1-250-277-2539 ext. 1520 bram@flowr.ca