CNX Holdings Inc. Completes C$57.4M Private Placement Financing and Reverse Takeover of Theia Resources Ltd.

Press Release

In anticipation of going public, the company rebrands as “Flower One”

TORONTO, September 24, 2018/CNW/ – Flower One Holdings Inc. (“Flower One” or the “Company”), formerly Theia Resources Ltd. (“Theia”) is pleased to announce that it recently completed its previously announced reverse takeover transaction (the “Transaction”) whereby CNX Holdings Inc. (“CNX”) amalgamated with a wholly-owned subsidiary of Theia and the shareholders and option holders of CNX have received corresponding securities of Flower One on a 1:1 basis (after giving effect to the consolidation referenced below).

Pursuant to the Transaction:

  1. Change of Name. Theia changed its name to “Flower One Holdings Inc.” to reflect its new business and vision to become the leading cannabis cultivator, producer and innovator in the Nevada cannabis market.
  2. Consolidation of Shares. Flower One consolidated its share capital (the “Consolidation”) on a ten for one (with each ten pre-consolidation common shares of Theia being exchange for one post-consolidation common share (each, a “Theia Share”). On closing of the Transaction (and after giving effect to the consolidation and the financing referenced below), there were 172,192,279 common shares in the capital of Flower One issued and outstanding (the “Flower One Shares”).
  3. CSE Conditional Approval. The Canadian Securities Exchange (the “CSE”) has conditionally approved the listing of the Flower One Shares. Listing is subject to Flower One’s fulfillment of all listing requirements of the CSE.

“Over the past five months, Flower One has been actively managing the conversion and additional building enhancements to the largest commercial scale greenhouse in the state of Nevada,” said Ken Villazor, CEO of Flower One Holdings Inc.. “We share the excitement of our shareholders and employees. Our state-of-art facility will provide 400,000 square feet of cannabis cultivation and 55,000 square feet of high tech processing, packaging and extraction making it the largest facility of its kind in Nevada. With our commercial scale, automation and technology, Flower One is positioned very well to be the preferred partner for major cannabis consumer brands looking to strategically enter what we believe is the most lucrative cannabis market in the United States.”

Flower One expects to launch a corporate website concurrent with its commencement of trading on the CSE.

Private Placement Financing
Prior to the completion of the Transaction, CNX completed private placement offerings of common shares and subscription receipts for aggregate gross proceeds of C$57.4 million (collectively, the “Offering”), which included a private placement of Class A common shares (the “Common Shares”) and subscription receipts (the “Subscription Receipts”) at an issue price of C$2.00 or US$1.50 per Common Share and US$1.50 per Subscription Receipt. The proceeds from the Subscription Receipts, less certain expenses, were placed into escrow on completion of the Subscription Receipt offering. Upon closing of the Transaction, each Subscription Receipt was converted on a one-on-one basis into a total of 6,550,867 Common Shares. The escrowed proceeds from the sale of the Subscription Receipts, less the commission of the agents and certain fees and expenses, have been released from escrow to Flower One. Eight Capital, with a syndicate that included Industrial Alliance Securities Inc., acted as agents to CNX in connection with the Offering of Subscription Receipts.
Flower One intends to deploy the proceeds of the Offering to:

  1. complete the acquisition of a twelve acre site with a nine acre greenhouse in Nevada; and
  2. advance the Company’s ongoing conversion and additional construction of this greenhouse to a 400,000 square foot cannabis cultivation operation and 55,000 square foot production and packaging facility.

New Board and Management
Upon closing of the Transaction, the board of directors and management of Flower One were reconstituted as follows in place of the previous directors and officers of Theia:

  • Ken Villazor, President, Chief Executive Officer and Director;
  • Geoff Miachika, Chief Financial Officer;
  • Jean St. Martin, Corporate Secretary;
  • Amit Varma, Director;
  • David Wesley, Director; and
  • Warner Fong, Director.

Biographical descriptions of each director and member of the senior management team of Flower One will be included in the Listing Statement referenced below.

Information for Shareholders

Flower One’s transfer agent, Odyssey Trust Company (“Odyssey”), will be delivering share certificates or statements pursuant to the Direct Registration System (“DRS”) to the following shareholders, evidencing the aggregate number Flower One Shares that they have received in connection with the completion of the Transaction:

Shareholders No. of Flower One Shares Issued % of Issued and Outstanding Flower One Shares (non- diluted basis)
Former Holders of CNX Shares 162,956,625 94.64%
Former Holder of Theia Shares 2,154,775 1.25%
Former Holders of Subscription Receipts 6,550,867 3.80%
Former Theia Debt Holders 250,000* 0.15%
Agents 280,012 0.16%
TOTAL 172,192,279 100%

Flower One Shares issued in full settlement of pre-existing debt owed by Theia to several parties in the aggregate amount of C$835,000.

Shareholders of Flower One wishing to receive a physical share certificate should contact Odyssey for information on how to obtain physical share certificates in place of a DRS statement.

The ISIN number for the Flower One Shares is CA34348Q1028 and the trading symbol reserved for the Flower One Shares on the CSE is “FONE”.

Early Warning

In connection with the closing of the Transaction on September 21, 2018, each of the Yaletown Family Trust and the Southlands Family Trust (former shareholders of CNX) acquired 36,000,000 Flower One Shares. Prior to the completion of the Transaction, neither the Yaletown Family Trust nor the Southlands Family Trust owned any securities of Theia. As at the date hereof, the 36,000,000 Flower One Shares held by each trust represent approximately 20.9%, respectively, of the total issued and outstanding equity shares of Flower One. The Flower One Shares were acquired in each case for investment purposes only. Depending on market and other conditions, or as future circumstances may dictate, both trusts may, respectively, from time to time, and subject to any contractual lock-up agreements, increase or decrease their holdings of Flower One Shares or other securities of Flower One.

This portion of this news release is issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues of the Canadian Securities Administrators, which also requires an early warning report to be filed with the applicable securities regulators containing additional information with respect to the foregoing matters. A copy of the early warning reports of the Yaletown Family Trust and the Southlands Family Trust will be available on Flower One’s issuer profile on SEDAR at the Yaletown Family Trust and the Southlands Family Trust can be contacted c/o Flower One at 20 Richmond Street East, Suite 600, Toronto, Ontario, M5C 2R9, Canada.

Further Information

For further information with respect to the Transaction and the business of Flower One, please refer to the listing statement of Flower One dated September 21, 2018 (the “Listing Statement”) and to be posted under Flower One’s issuer profile on SEDAR at in due course.

All media and investor relation inquiries should be directed to:

Investor Relations

Ken Villazor
President, Flower One Holdings Inc.

Informational Purposes Only

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the FlowerOne’s securities to, or for the account or benefit of, persons in any jurisdiction.

About Flower One Holdings Inc.

Flower One is a British Columbia-based company with strategic investments in the cannabis sector through its wholly-owned subsidiaries. The Company is sharply-focused on the recreational and medical cannabis markets in Nevada, where it is currently converting the largest commercial scale greenhouse in the State. Once fully converted and constructed, the 455,000 square foot facility will be used for cannabis cultivation as well as the processing, production and high-volume packaging of dry flower, cannabis oils, concentrates and infused products.

Cautionary Note regarding Forward Looking Information

Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in Flower One’s public documents. When used in this news release, words such as “will, could, plan, estimate, expect, intend, may, potential, believe, should,” and similar expressions, are forward-looking statements.

Forward-looking statements may include, without limitation, statements relating to the execution of the Company’s strategy, new opportunities, future growth, potential capabilities of the cultivation and processing facility in Nevada, potential partnering opportunities with cannabis consumer brands, profitability of the cannabis market in the United States, as well as the intended listing of securities on the CSE and other statements.

Although Flower One has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on obtaining regulatory approvals; investing in target companies or projects that are engaged in activities currently considered illegal under US federal law; changes in laws; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth and state adoption due to inconsistent public opinion and perception of the medical-use and adult-use marijuana industry and; regulatory or political change.

There can be no assurance that such information will prove to be accurate or that management’s expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events.

Accordingly, readers should not place undue reliance on forward-looking statements. The forward- looking statements in this news release are made as of the date of this release. CNX Holdings disclaims any intention or obligation to update or revise such information, except as required by applicable law, and CNX Holdings does not assume any liability for disclosure relating to any other company mentioned herein.

U.S. Disclaimer

The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and accordingly may not be offered or sold within the United States or to “U.S. persons”, as such term is defined in Regulation S promulgated under the U.S. Securities Act (”U.S. Persons”), except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom.

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