Benzinga | Sep 27, 2021 01:59PM EDT

Flower One Raises $5M Via Non-Brokered Private Placement Of Units

Cannabis company Flower One Holdings Inc. (CSE:FONE) (OTCQX:FLOOF) (FSE:F11) has raised $5 million through the non-brokered private placement of its units.

Based in Nevada, the company reported closing the first tranche of the financing on Monday.

Under the non-brokered private placement deal, Flower One issued a total of 50 million units, with each unit comprised of one common share of Flower One and one common share purchase warrant.

Each warrant enables the holder to acquire one common share of the company at 25 cents per share at any time in the next three years.

In addition, Flower One has reserved an option at its sole discretion to increase the size of the private placement by $10 million to an aggregate of $15 million.

"We are grateful for the support and vote of confidence signaled by an above-market transaction," Kellen O'Keefe, Flower One's president and CEO, disclosed Monday.

The company said it will utilize net proceeds for implementing critical improvements to the facilities and for general corporate and working capital purposes.

"As we have indicated since the restructuring, there are critical improvements that need to be made to the facility in order to assure we are able to produce at the quality and consistency levels required to achieve our corporate objectives," O'Keefe further explained. "With this closing and enhanced financial position, we now can begin implementing these improvements and introduce further automation -- all with the goals of increasing productivity and profitability. Additionally, this closing positions Flower One for long-term success while driving value for shareholders."

According to its latest earnings report, the company generated $18.3 million in the second quarter of 2021, up 32% from the first quarter 2021 revenue of $13.9 million, more than five times its second-quarter 2020 revenues of $3.4 million, and well above its guidance of $16 million -- $18 million.

Price Action

Flower One's shares were trading 1.75% lower at $0.0900 per share at the time of writing Monday early afternoon.

Photo: Courtesy of Karolina Grabowska from Pexels