Highlights: Strategic Review Committee has commenced process of rightsizing headcount for immediate cost reductions, reducing annual operating expenses by approximately $2 million, excluding restructuring charges.The Company maintains a strong liquidity position with approximately $23.5 million in cash and cash equivalents as of March 31, 2021 with a $100 million base shelf prospectus available.Flowr has disposed of non-core licenses and operations in offshore jurisdictions.The Company expects approximately $5 million from non-core asset sales, including approximately 4 acres of industrial land located in Kelowna.The Company focused on being an ultra-premium and premium dry flower producer in Canada and the E.U. TORONTO, April 14, 2021 (GLOBE NEWSWIRE) -- The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) (“Flowr” or the “Company”) is pleased to announce the results of a strategic review process designed to improve the financial capacity of the Company and refocus the operations to the core business of the Company, which is to produce ultra-premium and premium dry flower for the Canadian and European markets. The Board of Directors of the Company appointed a Strategic Review Committee led by independent director Joanne Lee with a view to evaluating options for non-core assets and to develop a strategy for reducing SG&A expenses at the Company. “Since the start of the new year, the Strategic Review Committee has worked hard to make Flowr a leaner and more focused Company,” commented Steve Klein, Chair of the Board of Directors. “Within ninety days, the Company has made the decision to dispose of non-core assets and has been very creative in reducing cash outlays and started to right-size its headcount, all with a view to improving its balance sheet and driving towards profitability. This is hard work that we hope will pay off for all shareholders in the long-term.” Strategic Review The Strategic Review Committee was appointed by the Board of Directors with a view to: (i) reduce corporate overhead and headcount; (ii) dispose of non-core assets, including duplicative licenses in the E.U.; and (iii) implement further cost savings strategies with a view to preserving cash and cash equivalents. SG&A Review Headcount Reduction In the first quarter of 2021, the Strategic Review Committee identified corporate overhead reduction opportunities, resulting in SG&A reductions of approximately $2 million per year. The Company has also determined to have the majority of senior level executive positions relocate to its facilities in Kelowna, British Columbia with relocations expected in the second quarter of this year. Toronto Office The Company has made the strategic decision to close the Toronto office and move most key management personnel positions to Kelowna. The Company is in the process of sub-leasing its Toronto office. The Company has successfully implemented remote working – as a result, all remaining Toronto employees will continue to work remotely. Fenwick Sublease The Company has made the strategic decision to sub-sublease approximately 75% of its multiuse facility located in Kelowna, along with the outdoor space under its lease. The Company will continue to use a portion of the building for dock warehousing needs and expects the subleases of the remaining areas to result in annualized cash flow savings of up to approximately $500,000 per year. Non-Core Assets and Operations Sale of Non-Core Assets The Strategic Review Committee has identified approximately 4 acres of industrial land in Kelowna that is non-core to the business and currently vacant. The Company has initiated the sale of non-core land and expects gross proceeds of between $4-5 million from the sale. In addition, the Company is in the process of selling large-scale extraction manufacturing equipment and expects gross proceeds from sale to be approximately $1 million. Lastly, the Company owns approximately 6 hectares of industrial land in Aljustrel, Portugal. The Company has yet to determine whether to sell this land; however, the fair market value is expected to be in excess of $1 million. Sale of Non-Core Licenses The Company will be exiting all non-core jurisdictions, including Australia, Uruguay and Spain. To that end, the Company has entered into an agreement to sell Terra Nova Business Holdings Inc., an indirect wholly-owned subsidiary, which holds a pre-license authorizing it to construct a medical cannabis greenhouse facility in Portugal. The purchaser of Terra Nova has assumed all of the obligations of Terra Nova and allowed for Flowr to regain a 10% equity interest in the event certain milestone occur. In addition, Flowr has terminated the call option agreement between Terrace Global Inc. (“Terrace”), a wholly-owned subsidiary, and Inception Investment Corp., such that Terrace will no longer seek to acquire an equity interest in the recreational cannabis business in Uruguay. Flowr has also sold Oransur, S.A., an indirect wholly-owned subsidiary, which was a hemp operator in Uruguay. Under the terms of the agreement, Flowr will be allowed to regain a 10% equity interest in the event certain milestones occur. The Company is also in the process of selling TCann Pty Ltd., the entity that holds its medical cannabis licenses in Australia. Upon completion this sale will represent the Company’s exit from the Australian medical cannabis market and there will be no further operating or capital expenses directed towards those operation post-closing. Overall, the exit or disposition of these businesses and assets are expected to save the Company approximately $1 million on an annual basis. Cash Preservation Initiatives Marketing Budget in Shares The Company’s marketing firm of record, Zerotrillion Ltd. (“Zerotrillion”), has agreed to accept $310,778 of its fees payable in common shares in the capital of the Company (the “Consideration Shares”) pursuant to a shares for services agreement (the “Shares for Services Agreement”). Pursuant to the Shares for Services Agreement, the Corporation proposes to issue, subject to the approval of the TSX Venture Exchange (“TSXV”), the Consideration Shares to the Consultant in lieu of cash as compensation for the Consultant’s provision of certain media consulting services, including advertising services, to the Corporation in accordance with the Shares for Services Agreement and the 2021 Creative Services Agreement appended thereto. The Consideration Shares will compensate the Consultant for its services to the Corporation between March 31, 2021 and March 31, 2022, and will be issued on a quarterly basis. The Consideration Shares will be issued at a deemed price per Consideration Share equal to the greater of: (i) $0.10; and (ii) the volume-weighted average trading price of the Consideration Shares on the TSXV on the last trading day of each fiscal quarter in which the Consulting Fee (as defined in the Shares for Services Agreement) was earned through the provision of services to the Corporation, less twenty-five percent (25%). In 2021, Flowr won three awards at the ADCANN Awards - including the coveted Brand of The Year award. The annual awards, which are voted on by the public, exist to celebrate the best marketing and advertising across Canada’s growing cannabis industry. Alongside the Brand of The Year Award, Flowr also won Campaign of the Year for their Rembrandt inspired BC Pink Kush Campaign which works with regulations of the cannabis industry to highlight Flowr’s approach by blending art and science. Zerotrillion, Flowr’s agency of record, was also recognized for its work building the Flowr brand and subsequent campaigns and was awarded Agency of The Year. RSUs for Salary and Director Fees In an effort to preserve cash and further alignment directors and employees with the Company, the Company has implemented a program whereby employees may take up to 20% of their base salary in restricted share units (“RSUs”). In addition, the Board of Directors has agreed to receive 50% of its director fees payable in RSUs. Other Balance Sheet Initiatives ATB Amendments On December 18, 2020, the Company entered into an Amending and Restated Credit Agreement (“ARCA”) with a syndicate of lenders led by ATB Financial. The ARCA provided for additional covenant flexibility for the Company such that the only financial covenants in place until the fourth quarter of 2021 are for the Corporation to maintain a senior debt to tangible net worth ratio of greater than 1.3:1 and a minimum cash on hand of $3.5 million. In addition, the ARCA allows for the Corporation to prepay the ARCA by $5 million above its principal repayments, at which point this covenant relief will be extended for an additional year and the maturity of the loan would be extended for an additional year. In addition, the ARCA provided for the following financing baskets available without lender pre-approval: (i) up to $2 million in respect of PMSI financing; (ii) up to $2.5 million in respect of accounts receivable factoring; and (iii) unlimited junior permitted indebtedness. Debenture Conversion On November 16, 2020, the Corporation announced completion of the early conversion of certain of its 10.0% subordinated secured convertible debentures due April 27, 2024 (the “Debentures”) pursuant to an early conversion opportunity (the “Early Conversion Opportunity”). Approximately $16.4 million aggregate principal amount of Debentures were converted under the Early Conversion Opportunity, resulting in the issuance of approximately 47.8 million Common Shares. Upon closing of the Early Conversion Opportunity, there were approximately $5 million aggregate principal amount of 10% Subordinated Debentures still outstanding. All such outstanding 10% Subordinated Debentures continue to be governed by the terms of the indenture between the Corporation and Computershare Trust Company of Canada dated April 27, 2020, as amended. $15.9 Million Bought Deal Financing On March 16, 2021, the Company closed a bought deal offering (the “Offering”). In connection with the Offering, the Company issued 31,127,453 units of the Company (the “Units”) at a price of $0.51 per Unit (the “Issue Price”) for aggregate gross proceeds to the Company of approximately $15.9 million, inclusive of the partial exercise of the over-allotment option. Each Unit consists of one Common Share and one full Common Share purchase warrant of the Company (each whole warrant, a “Warrant”). Each Warrant is exercisable to acquire one Common Share at an exercise price of $0.64 per Common Share for a period of two years from March 16, 2021 (the “Closing Date”). Following the partial exercise of the over-allotment option granted to the Underwriters, an additional 3,274,508 Units remain exercisable by the Underwriters at the Issue Price, in whole or in part, at any time for a period of thirty days from the Closing Date. The Underwriters were paid a cash commission equal to 7.0% of the gross proceeds of the Offering and received Unit purchase warrants of the Company (the “Underwriters’ Warrants”) equal to 6.0% of the number of Units sold under the Offering, with each Underwriters’ Warrant being exercisable to acquire one common share at the Issue Price for a period of 24 months from the Closing Date. The net proceeds of the Offering will be used for general corporate purposes. Base Shelf Prospectus On April 13, 2021, the Company announced that it filed a final short form base shelf prospectus (the “Final Shelf Prospectus”) with the securities commissions or similar authorities in each province of Canada. The Final Shelf Prospectus enables the Company to offer and issue up to $100,000,000 of common shares, preferred shares, debt securities, subscription receipts and warrants, or any combination thereof (collectively, the “Securities”). The Securities may be issued from time to time, separately or together, in amounts, at prices, and on terms to be determined based on market conditions at the time of the offering and as set out in an accompanying prospectus supplement, during the 25-month period that the Final Shelf Prospectus remains effective. The amount and timing of any future offerings will be based on the Company’s financial requirements and market conditions at that time. About The Flowr Corporation The Flowr Corporation is a Toronto-headquartered cannabis company with operations in Canada, Europe, and Australia. Its Canadian operating campus, located in Kelowna, BC, includes a purpose-built, GMP-designed indoor cultivation facility; an outdoor and greenhouse cultivation site; and a state-of-the-art R&D facility. From this campus, Flowr produces recreational and medicinal products. Internationally, Flowr intends to service the global medical cannabis market through its subsidiary Holigen, which has a license for cannabis cultivation in Portugal and operates GMP licensed facilities in both Portugal and Australia. In 2020, Flowr’s BC Pink Kush was recognized as the top indica strain in Canada by kind magazine. Flowr aims to support improving outcomes through responsible cannabis use and, as an established expert in cannabis cultivation, strives to be the brand of choice for consumers and patients seeking the highest-quality craftsmanship and product consistency across a portfolio of differentiated cannabis products. For more information, please visit flowrcorp.com or follow Flowr on Twitter: @FlowrCanada and LinkedIn: The Flowr Corporation. On behalf of The Flowr Corporation:Lance EmanuelPresident and Interim Chief Executive Officer CONTACT INFORMATION: INVESTORS & MEDIA:Irina HossuChief Financial Officeririna.email@example.com Forward-Looking Information and Statements This press release contains “forward-looking information” within the meaning of Canadian securities laws. Often, but not always, forward-looking information can be identified by the use of words such as “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 information and 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 such information and 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 inability to complete the sale of non-core assets described in this press release; general economic and stock market conditions; adverse industry events; loss of markets; future legislative and regulatory developments in Canada and elsewhere; the cannabis industry in Canada generally; the ability of Flowr to implement its business strategies; Flowr’s inability to produce or sell premium quality cannabis, risks and uncertainties detailed from time to time in Flowr’s filings with the Canadian Securities Administrators; the Company’s inability to raise capital or have the liquidity to operate or advance its strategic initiatives 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 or statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking information or statement can be guaranteed. Except as required by applicable securities laws, forward-looking information and statements speak only as of the date on which they are made and Flowr undertakes no obligation to publicly update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise. When considering such forward-looking information and statements, readers should keep in mind the risk factors and other cautionary statements in Flowr’s Annual Information Form dated April 29, 2020 (the “AIF”) and filed with the applicable securities regulatory authorities in Canada. The risk factors and other factors noted in the AIF could cause actual events or results to differ materially from those described in any forward-looking information or statements. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.