Ionic Brands Corp. (CNSX:IONC) entered into a non-binding letter of intent to acquire certain assets of Lobe Sciences Ltd. (CNSX:LOBE) for CAD 23 million on November 30, 2020. Ionic Brands entered into asset purchase agreement to acquire certain assets of Lobe Sciences for CAD 31.9 million on February 22, 2021. Total CAD 32 million in sale proceeds to be received including a combination of cash, secured promissory note, and preferred shares of Ionic Brands. Pursuant to the agreement, on the closing date, Lobe's subsidiary vendor will receive consideration payable through a combination of the payment of CAD 1.75 million in cash and the issuance 100,406,701 series E non-voting preferred shares of Ionic Brands. Each Ionic Brands preference share is exchangeable into one Ionic Brands' share on a one-for-one basis and carries an annual dividend equal to 13% for a period of two years from the closing date, with Ionic Brands' preference shares automatically converting to Ionic Brands' shares four years from the issuance date and a secured promissory note in the principal amount of $0.05 million (CAD 0.03 million) maturing two years from the date of issue and bearing interest at a rate of 7%, secured by the assets. The sale price for the assets shall be a minimum of CAD 23 million, payable through the issuance of Ionic post-consolidation common shares. Following the closing, it is expected that Lobe will own approximately 49% of Ionic's common shares and Ionic's Board of Directors is expected to be comprised of five members and Lobe will have the right to appoint two directors to the Ionic board. Also, Ionic Brands' Board of Directors is expected to be comprised of seven members and Lobe will have the right to appoint two directors to the Ionic Brands' board.


The transaction is subject to several closing conditions: (i) satisfactory due diligence by both Ionic and Lobe; (ii) completion of a definitive agreement with binding terms and conditions for the Transaction, including finalization of the specific Assets that will be sold and certain Cowlitz assets that may be retained by Lobe; (iii) all respective directors and officers of Lobe and Ionic entering into support agreements for the Transaction; (iv) approval by the boards of directors of both Lobe and Ionic; (v) the completion of a share consolidation by Ionic on a minimum of one new Ionic common share for every four and a half (4.5) old Ionic common shares; (vi) the conversion of all Ionic debentures into a secured equity or a similar instrument; (vii) completion of a concurrent financing by Ionic; (viii) Ionic having all cease trade orders issued against it lifted(2); (ix) Ionic applying to the CSE for requalification and qualifying for listing and resumption of trading(2); and (xviii) the receipt of all required shareholder and regulatory approvals, including the approval of the CSE. In addition, the transaction is subject to Ionic Brands arranging at least 90% of their outstanding 10% debentures being converted into preferred voting shares of Ionic Brands. The transaction is expected to close prior to March 31, 2021. The transaction is accretive to both parties.

Ionic Brands Corp. (CNSX:IONC) completed the acquisition of certain assets of Lobe Sciences Ltd. (CNSX:LOBE) on March 8, 2021. In connection with the closing of the Transaction, the Company amended the terms of the Asset Purchase Agreement governing the Transaction. The Company covenanted in favor of Lobe's subsidiary vendor to convert, within 60 days following the date hereof, at least 90% of the principal amount of the outstanding secured convertible debentures of the Company due May 16, 2022 (the “Debentures”), resulting in obligations outstanding (including principal and accrued interest, if any) of no more than CAD 1.8 million as of
the date of conversion. Furthermore, the Company agreed to certain minority board nomination in favor of Lobe. Furthermore, the company has entered into consulting agreements with certain managers of Cowlitz to provide advisory services to the Company's US operating company Blacklist Holdings Inc. for the purposes of expanding the Company's newly acquired brands to other US markets. The consideration paid is in the form of two million warrants priced at a premium to the closing price on March 8, 2021.