Theia Resources Ltd. (TSX-V:THH) is pleased to announce that it has entered into an Amalgamation Agreement dated June 29, 2018 with CNX Holdings Inc. and Flower One Corp. a wholly‑owned subsidiary of the Company, pursuant to which the Company will acquire all of the outstanding shares of CNX in exchange for common shares of the Company.

About CNX

CNX is currently a privately held, Ontario based company with strategic investments in the cannabis sector through its wholly-owned subsidiaries.  The company’s wholly-owned subsidiaries are located in Nevada where it is currently converting the largest commercial scale greenhouse in the State. The 430,000 square foot facility will be used for cannabis cultivation as well as the processing, production and high-volume packaging of cannabis oils, concentrates and infused products.

CNX, through one of its wholly-owned subsidiaries, is currently overseeing an intensive conversion of a greenhouse to prepare it for large-scale hydroponic cannabis cultivation, processing and production. The 430,000 square foot greenhouse is strategically positioned and within close proximity to the lucrative, tourism-driven Las Vegas adult-use and medical cannabis market. To date, more than 4,700 hours of construction and renovation work have been completed on the greenhouse. Planting in the facility will begin late 2018 and will be fully operational in early 2019. The Las Vegas Convention and Visitors Authority cites more than 55 million tourists are forecasted to visit the city in 2018.

Financings

Prior to or concurrently with completion of the Proposed Transaction, CNX intends to complete one or more private placement financings to raise gross proceeds of up to US$50 million by the sale of its Class A common voting shares, on terms and conditions acceptable to each of Theia, CNX and the TSX Venture Exchange.

Prior to completion of the Proposed Transaction, CNX will subscribe by way of a non-brokered private placement or bridge-loan financing, at the sole discretion of CNX, for gross proceeds to Theia of $250,000, subject to the acceptance of the TSXV. The proceeds of the Theia Financing will be used to pay the existing and proposed fees of Theia’s professional advisors.

Board and Management of Theia after the Proposed Transaction

It is anticipated that upon completion of the Proposed Transaction, all of the directors and officers of Theia will resign and will be replaced with nominees of CNX.  

The Transaction

The principal terms of the Proposed Transaction are as follows:

1. Theia will complete a 10:1 share consolidation.  The effect of the proposed Consolidation will be to reduce the number of common shares issued and outstanding from 21,547,750 pre-consolidated common shares to 2,154,775 post-consolidated common shares.
2. Theia will change its name to “Flower One Holdings Inc.” in conjunction with the proposed Consolidation.
3. The Proposed Transaction will be structured as a triangular amalgamation.  Under the terms of the Amalgamation Agreement, CNX will amalgamate with Subco and as part of the amalgamation, Theia will acquire all of the outstanding shares of CNX in exchange for post–consolidation common shares of Theia (“Theia Shares”) on a one for one basis.  It is contemplated that Theia will also acquire all outstanding options of CNX in exchange for equivalent Theia options, adjusted for the applicable exchange ratio.
4. On or before completion of the Proposed Transaction, Theia will seek to delist from the TSXV and will apply to relist the Theia Shares on the Canadian Securities Exchange.
5. Concurrently with completion of the Proposed Transaction, Theia will be required to relinquish all claim to its mining assets, in exchange for a release of all claims and liabilities whatsoever related to the mining assets.
6. On or prior to completion of the Proposed Transaction, Theia intends to complete a settlement of outstanding indebtedness owed by Theia in the amount of approximately $950,000 by way of issuing 250,000 Theia Shares, subject to TSXV approval, to the creditors owed such debt (the “Debt Settlement”).

Upon completion of the Proposed Transaction, Theia will have approximately 143,183,975 Theia Shares outstanding (assuming completion of the Consolidation, the Amalgamation and the Debt Settlement, but prior to completion of the CNX Private Placement).

Trading in the Theia Shares on the TSXV is halted at present. Unless the Proposed Transaction fails to close, Theia does not expect its shares will resume trading again until listing has been accepted by the CSE.

The Proposed Transaction is an arms-length transaction.

Other Transaction Details

Shareholder Approval

Theia and CNX intend to seek shareholder approval for the Proposed Transaction and related matters to the extent required.  Theia does not intend to seek shareholder approval for the Proposed Transaction itself, unless required by applicable regulatory authorities.  Theia’s annual and special meeting of its shareholders is scheduled for August 17, 2018.  CNX’s special meeting (the “CNX Meeting”) of its shareholders is scheduled for August 17, 2018.

Conditions to the Proposed Transaction

The completion of the Proposed Transaction will be subject to certain conditions precedent, including the following:

Closing of the Proposed Transaction

The Proposed Transaction is expected to close on approximately August 21, 2018.  The Proposed Transaction is an arm’s length transaction.