/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO
UNITED STATES WIRE SERVICES/
Amendments enable further retail brand
expansion and create an additional high margin US revenue channel
for the Hifyre™ technology platform
TORONTO, Jan. 31, 2022 /CNW/ - Fire & Flower Holdings
Corp. ("Fire & Flower'' or the "Company") (TSX: FAF) (OTCQX:
FFLWF), today announced it has amended certain terms (the
"Amendments") of its previously announced option agreement and
licensing agreement (collectively "Strategic Agreements") with Fire
& Flower US Holdings Inc. (formerly American Acres Managers)
("Fire & Flower US" or the "Licensee").
The Strategic Agreements provide Fire & Flower with a path
to acquire corporate-owned cannabis retail stores in major markets
in the US and deploys the Hifyre™ technology platform in the
US.
Under the Strategic Agreements, Fire & Flower has the option
to acquire Fire & Flower US, which acquisition is expected to
occur upon the federal legalization of adult-use cannabis in
the United States or when
otherwise permitted by the policies of the Toronto Stock Exchange
(the "TSX") or any other stock exchange on which the Company's
securities are listed for trading.
"The amendments to our strategic agreements with Fire &
Flower US expand the ability for the Fire & Flower and Hifyre
brands to open in key markets ahead of federal permissibility of
adult-use cannabis in the US. In addition, the technology, software
and support fees create an additional high margin revenue channel
in our digital business segment," commented Trevor Fencott, Chief Executive Officer of Fire
& Flower.
Fencott continued, "The amended strategic agreements, along with
our relationship with the owner of Circle K, Alimentation
Couche-Tard, will help position Fire & Flower to one day be a
key player in the US cannabis industry, where the demand for
incorporating technologically advanced systems has never been
greater. We believe the amendments to the strategic agreement
provide a meaningful near and long-term benefit to Fire &
Flower shareholders in our option to acquire Fire & Flower
US."
Highlights of the Amendments to the Strategic
Agreement
- Fire & Flower continues to have the option to acquire the
Licensee.
- Hifyre will now receive a one-time implementation fee and
ongoing software and support fees for each Fire & Flower
branded store operated by Fire & Flower US.
- The Company shall (subject to certain conditions) pay to the
shareholders of the Licensee an aggregate amount of US$5 million and will have the option to pay
additional cash amounts. The cash amounts, plus a premium of 1%,
calculated monthly, shall be deducted from the fair-market value
purchase price payable upon exercise by Fire & Flower of the
option to acquire the Licensee. This acquisition payment structure
replaces the discount to fair market value contemplated in the
Strategic Agreements prior to the Amendments.
- Upon payment of additional cash amounts, Fire & Flower may
(i) extend its option to acquire the Licensee to February 2028 or such later date upon the federal
legalization of adult-use cannabis in the
United States or when such acquisition would otherwise
permitted by the policies of the TSX or any other stock exchange on
which the Company's securities are listed for trading, (ii) expand
the number of cannabis retail stores that the Licensee may operate
utilizing the licensed trademarks/intellectual property, and/or
(ii) expand the Territory within which the Licensee may operate
cannabis retailer stores utilizing the licensed
trademarks/intellectual property.
Benefits of the Amendments
- High margin US revenue stream created in the Hifyre digital
business segment.
- More favorable terms for Fire & Flower on its purchase
option of Fire & Flower US.
- Establishes a framework for the Fire & Flower US network of
cannabis retail stores utilizing Fire & Flower to expand within
California and Colorado, and into other US states.
Related Party Disclosure
Trevor Fencott, an officer and
director of the Company is a "related party", for the purposes of
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101"), on account of being
a Licensee Shareholder. As such, any payments or issuance of shares
of the Company to be made to Mr. Fencott pursuant to the Option
Agreement may be a "related party transaction" for the
purposes of MI 61-101. The Company is relying on exemptions from
the formal valuation and minority shareholder approval requirements
available under MI 61-101. The Company is exempt from the formal
valuation requirement in section 5.4 and the minority shareholder
approval requirement in section 5.6 of MI 61-101 in reliance on
sections 5.5(a) and 5.7(a), respectively, of MI 61-101 as the fair
market value of the transaction, insofar as it involves related
parties, was not more than 25% of the Company's market
capitalization. Mr. Fencott declared a conflict of interest and
abstained from voting with respect to the approval of the
transactions described herein.
About Fire & Flower
Fire & Flower is a leading, technology-powered, adult-use
cannabis retailer with over 100 corporate-owned stores in its
network. The Company leverages its wholly-owned technology
development subsidiary, Hifyre Inc., to continually advance its
proprietary retail operations model while also providing additional
independent high-margin revenue streams. Fire & Flower guides
consumers through the complex world of cannabis through
education-focused, best-in-class retailing while the Hifyre™
digital retail and analytics platform empowers retailers to
optimize their connections with consumers. The Company's leadership
team combines extensive experience in the technology, cannabis and
retail industries.
Through the strategic investment of Alimentation Couche-Tard
Inc. (owner of Circle K convenience stores), the Company has set
its sights on global expansion as new cannabis markets emerge and
is poised to expand into the United
States when permitted through its strategic licensing
agreement with Fire & Flower U.S. Holdings upon the occurrence
of certain changes to the cannabis regulatory regime.
Fire & Flower is a multi-banner cannabis retail operator
that owns and operates the Fire & Flower, Friendly Stranger,
Happy Dayz and Hotbox brands. Fire & Flower Holdings Corp. owns
all issued and outstanding shares in Fire & Flower Inc. and
Friendly Stranger Holdings Corp., licensed cannabis retailers that
own and operate cannabis retail stores in the provinces of
Alberta, Saskatchewan, Manitoba, British
Columbia and Ontario, and
the Yukon territory.
To learn more about Fire & Flower, visit
https://www.fireandflower.com.
About Hifyre
The Hifyre Digital Retail and Analytics Platform is a
proprietary ecosystem of products that includes the Spark Perks
member program, Hifyre ONE retail software platform, Hifyre IQ
cannabis data and analytics platform, and Hifyre Reach digital
advertising network.
The Hifyre platform also supports Fire & Flower's advanced
operations and provides a competitive advantage in providing a
tailored digital experience and understanding consumer behaviours
in the evolving cannabis market.
To learn more about Hifyre, visit https://www.hifyre.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This news release contains certain
forward-looking information within the meaning of applicable
Canadian securities laws ("forward-looking statements"). All
statements other than statements of present or historical fact are
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as
"anticipate", "achieve", "could", "believe", "plan", "intend",
"objective", "continuous", "ongoing", "estimate", "outlook",
"expect", "project" and similar words, including negatives thereof,
suggesting future outcomes or that certain events or conditions
"may" or "will" occur. These statements are only predictions.
Forward-looking statements in this news release include, but are
not limited to, statements in respect of the development of F&F
Branded Stores in the United
States, payments of amounts to Licensee Shareholders, the
potential benefits of the Amendments and the potential acquisition
of the Licensee and the terms thereof.
Forward-looking statements are based on the opinions and
estimates of management of Fire & Flower at the date the
statements are made based on information then available to the Fire
& Flower. Various factors and assumptions are applied in
drawing conclusions or making the forecasts or projections set out
in forward-looking statements, including market conditions and the
business of the Company. Forward-looking statements are subject to
and involve a number of known and unknown, variables, risks and
uncertainties, many of which are beyond the control of Fire &
Flower, which may cause Fire & Flower's actual performance and
results to differ materially from any projections of future
performance or results expressed or implied by such forward-looking
statements. Such factors, among other things, include: regulatory
and other approvals or consents; fluctuations in general
macroeconomic conditions; fluctuations in securities markets; the
impact of the COVID-19 pandemic; the ability of the Company to
successfully achieve its business objectives and political and
social uncertainties.
No assurance can be given that the expectations reflected in
forward-looking statements will prove to be correct. Although the
forward-looking statements contained in this news release are based
upon what management of the Company believes, or believed at the
time, to be reasonable assumptions, the Company cannot assure
shareholders that actual results will be consistent with such
forward-looking statements, as there may be other factors that
cause results not to be as anticipated, estimated or intended.
Readers should not place undue reliance on the forward-looking
statements and information contained in this news release.
Additional information regarding risks and uncertainties relating
to the Company's business are contained under the heading "Risk
Factors" in the Company's annual information form dated
April 30, 2021 and the heading "Risks
and Uncertainties" in the management discussion and analysis for
the quarter ended October 30, 2021
filed on its issuer profile on SEDAR at www.sedar.com. The
forward-looking statements contained in this press release are made
as of the date of this press release, and the Company does not
undertake to update any forward-looking statements that are
contained or referenced herein, except in accordance with
applicable securities laws.
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein.
SOURCE Fire & Flower Holdings Corp.