Item
2.01
|
Completion
of Acquisition or Disposition of Assets.
|
As
previously reported in the Current Report on Form 8-K filed on May 16, 2017, by Green Spirit Industries, Inc. (the “
Company
”),
as of May 11, 2017, the Company, through its wholly-owned subsidiary, Project 1493, LLC (“
1493
”), acquired
four medical marijuana dispensaries located in the following cities in Puerto Rico: (1) Fajardo (the “
Fajardo Dispensary
”),
(2) Carolina (the “
Carolina Dispensary
”), (3) Dorado (the “
Dorado Dispensary
”), and (4)
San Juan (the “
San Juan Dispensary
”).
The four medical marijuana dispensaries will not be fully licensed
until construction of the dispensaries are completed and the Department of Health of Puerto Rico issues the requisite operating
permit for each of the dispensaries.
Final
Purchasing Agreement with Puerto Rico Industrial Holdings Biotech Corporation
On
July 7, 2017, 1493 entered into a final purchasing agreement (the “
PRIH Agreement
”) with Puerto Rico Industrial
Holdings Biotech Corporation, a corporation formed under the laws of the Commonwealth of Puerto Rico (“
PRIH
”),
pursuant to which we acquired all of the legal rights, permits, licenses, leasing contracts and assets pertaining to the Carolina
Dispensary, the Dorado Dispensary and the Fajardo Dispensary, in exchange for $300,000, $150,000 of which shall be deposited into
an escrow account until the closing of the PRIH Agreement.
In
connection with the PRIH Agreement, 1493, PRIH and
Heras
P.M. & I, Corp., a corporation formed under the laws of the Commonwealth of Puerto Rico (“
Heras
”),
entered
into an assignment of lease on June 15, 2017, (the “
Carolina Lease Assignment
”) which transfers and/or assigns
the rights under the lease agreement for the location of the Carolina Dispensary to 1493. PRIH entered into such lease agreement,
dated August 26, 2016,
with Heras to lease approximately 2,500 rentable square feet
for a term of five (5) years, commencing on September 1, 2016. The lease payments for such location will be $4,500 per month,
with an annual increase of 5%.
1493,
PRIH and
Efron Dorado, S.E., a corporation
formed under the laws of the Commonwealth of Puerto Rico (“
Efron
”),
entered
into an assignment of lease on June 7, 2017, (the “
Dorado Lease Assignment
”) which transfers and/or assigns
the rights under the lease agreement for the location of the Dorado
Dispensary
to
1493.
PRIH entered into such lease agreement, dated August 30, 2016, with Efron to lease approximately 1,900 rentable square
feet for a term of three (3) years, commencing on December 1, 2016. The lease payments for such location will be an annual amount
of $57,000, with an additional monthly marketing fee of $158.33.
The
Company is currently in the process of entering into an assignment of lease for the location of the Fajardo Dispensary. PRIH entered
into a lease agreement, dated August 30, 2016, with
Jose
Ramon Carino Ribot
to lease approximately 2,774 rentable square feet for a term of seventy-eight
(78) months, with three (3) options to renew the lease for an additional term of sixty (60) months. The lease payments for such
location will be $3,000 per month, with an annual increase of 5% for the initial term and any subsequent renewals of the lease.
In addition, the tenant must pay an annual fee of $1,315.71 for property taxes and $1,275 for property insurance.
Pursuant
to a non-compete clause set forth in the PRIH Agreement, PRIH has agreed not to establish a Medical Cannabis dispensary within
a two-mile radius from any of the three dispensaries. Each of the parties to the PRIH Agreement has made customary representations
and considerations in the PRIH Agreement.
The foregoing descriptions of the PRIH Agreement,
the Carolina Lease Assignment and the Dorado Lease Assignment do not purport to be complete and are subject to, and qualified
in their entirety by reference to the exhibits filed herewith, which exhibits are incorporated herein by reference.
Final
Purchasing Agreement with Good Vibes Distributors, LLC
On
July 7, 2017, 1493 entered into a final purchasing agreement (the “
GVD Agreement
”) with Good Vibes Distributors,
LLC, a corporation formed under the laws of the Commonwealth of Puerto Rico (“
GVD
”), pursuant to which we acquired
the dispensary prequalification license for the San Juan Dispensary, in exchange for $75,000. Pursuant to the GVD Agreement, 1493
has agreed to deposit the $7,500 to an escrow account until the closing of the GVD Agreement. At the closing, 1493 shall transfer
the remaining balance in the amount of $67,500 to GVD.
Pursuant
to non-compete clause set forth in the GVD Agreement, GVD has agreed not to establish a Medical Cannabis dispensary within a two-mile
radius from the San Juan Dispensary. Each of parties to the GVD Agreement has made customary representations and considerations
in the GVD Agreement.
On
July 11, 2017, 1493 entered into a lease agreement (the “
Lease Agreement
”) with Olympic Properties, Inc., a
corporation formed under the laws of the Commonwealth of Puerto Rico, to lease approximately 1,500 square feet and 8 parking spaces
on the first floor of 509-511 Andalucia Street in San Juan, Puerto Rico, for the location of the San Juan Dispensary. The lease
payments pursuant to the Lease Agreement shall be $1,600 per month for the initial three (3) years commencing on August 1, 2017,
after which the lease payment shall increase each year by 5% commencing on July 31, 2020.
The foregoing descriptions of the GVD Agreement
and the Lease Agreement do not purport to be complete and are subject to, and qualified in their entirety by reference
to the exhibits filed herewith, which exhibits are incorporated herein by reference.