Flow Beverage Corp. announced today that it has closed its previously disclosed private placement of a US$2 million secured convertible note (the “Note”) to BeatBox Beverages (“BeatBox”), Flow’s longstanding co-packing partner for ready-to-drink alcoholic beverages.
“The completion of this financing represents an important milestone in our strategic partnership with BeatBox,” said Nicholas Reichenbach, Founder and CEO of Flow. “BeatBox is a valued partner, and the funds from this Note will enable Flow to add two production lines at our Aurora facility. With both companies scaling rapidly, we are excited to strengthen our relationship as we advance innovation and sustainability in the North American beverage market.”
The Note matures on October 25, 2029, with an annual interest rate of 10%, payable quarterly, and is secured by Flow’s assets. The principal amount can be converted at any time, at BeatBox’s option, into Flow subordinate voting shares (the “Shares”) at a conversion price of $1.00 per share. Flow also retains the right to force conversion of the Note if, for five consecutive trading days, the volume-weighted average price of the Shares on the Toronto Stock Exchange exceeds $1.50 within one year of issuance until the maturity date.
Proceeds from the Note will be directed toward leasing and equipment costs to enhance capacity at Flow’s Aurora production facility.
On August 1, 2024, Flow amended its manufacturing agreement with BeatBox, extending the agreement term from five to six years and increasing the minimum total revenue commitment from $115 million to $213 million. This expansion will support BeatBox’s growing production needs and anticipated brand growth for Flow. In addition to meeting BeatBox’s increased demand, Flow will use the expanded capacity to fulfill other recent co-manufacturing agreements.
The Note and any Shares issued upon conversion will be subject to a statutory hold period of four months and one day under Canadian securities law, ending February 26, 2025.
