Item 1.01. Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On May 27, 2021, Medicine Man Technologies, Inc.,
a Nevada corporation (the “Company”), entered into an asset purchase agreement (the “APA”) with SCG Holding, LLC,
a Colorado limited liability company and wholly-owned subsidiary of the Company (the “Purchaser”), SCG Services, LLC, a Colorado
limited liability company (the “APA Seller”), and John Sakun and Vladimir Sakun (collectively, the “APA Members”),
pursuant to which the Purchaser will purchase all of the assets of the APA Seller that are used in or held for use in or are related to
the operation of the APA Seller’s business of growing, distributing and marketing recreational cannabis products, on the terms and
subject to the conditions set forth in the APA (the “Asset Purchase”) and assume obligations under contracts acquired as part
of the Asset Purchase.
The aggregate purchase price for the assets of
the APA Seller will be $6.725 million, 20% of which will be paid in cash, and 80% of which will be paid in shares of the Company’s
common stock based on the volume weighted average price per share of the Company’s common stock for the prior 30 consecutive trading
days, as determined in reasonable good faith by the Purchaser on the date that is three business days prior to the closing date of the
Asset Purchase. The Company will hold back 10% of each of the cash portion and the stock portion of the purchase price as collateral for
potential claims for indemnification from the APA Seller and the APA Members under the APA. Any portion of the held-back cash portion
and stock portion not used to satisfy indemnification claims will be released to the APA Members on the first anniversary of the closing
date of the Asset Purchase. The APA contains customary representations and warranties, covenants and indemnification provisions for a
transaction of this nature, including, without limitation, covenants regarding the operation of the business of the APA Seller prior to
the closing of the Asset Purchase, and confidentiality, non-compete and non-solicitation undertakings by the APA Sellers and the APA Members.
The APA also contains certain termination rights for each of the Purchaser (on its own behalf and on behalf of the Company) and the APA
Seller, subject to the conditions set forth in the APA, including, without limitation, if the closing of the Asset Purchase has not occurred
on or before September 24, 2021.
The closing of the Asset Purchase is conditioned
on closing of the Real Estate Purchase (as defined below) and subject to other closing conditions customary for a transaction of this
nature, including, without limitation, obtaining licensing approval from the Colorado Marijuana Enforcement Division and local regulatory
authorities.
Real Estate Purchase Agreement
Also, on May 27, 2021, the Purchaser entered into
an agreement of purchase and sale (the “APS” and, together with the APA, the “Agreements”) with BWR L.L.C., a
Colorado limited liability company (the “Real Estate Seller”), pursuant to which the Purchaser will purchase and acquire from
the Real Estate Seller certain real property consisting of approximately 36 acres located in Huerfano County, Colorado, together with,
among other things, all structures and improvements thereon, all fixtures therein or thereto and all privileges, easements and appurtenances
pertaining thereto, including all of the Real Estate Seller’s right, title and interest in and to any adjacent or adjoining streets,
alleys, or rights-of-ways and any strips or gores (the “Real Estate Purchase” and, together with the Asset Purchase, the “Purchases”).
The aggregate purchase price for the property
of the Real Estate Seller will be $4.5 million, which will be paid in cash, subject to adjustment via the closing prorations described
in the APS. The APS contains customary representations and warranties, covenants and indemnification provisions for a transaction of this
nature. The APS also contains certain termination rights for the Purchaser, subject to the conditions set forth in the APS including,
without limitation, if the closing of the Real Estate Purchase has not occurred on or before September 24, 2021.
The closing of the Real Estate Purchase is conditioned
on closing of the Asset Purchase and subject to other closing conditions customary for a transaction of this nature, including, without
limitation, obtaining licensing approval from the Colorado Marijuana Enforcement Division and local regulatory authorities.
The summary of the APA, the APS and the transactions
contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of each of the
APA and the APS, which are filed as Exhibits 2.1 and 2.2 to this Current Report on Form 8-K, each of which is incorporated herein by reference.
Forward-Looking Statements and Limitation on
Representations
This Current Report on Form 8-K contains “forward-looking
statements.” All statements contained in this Current Report on Form 8-K other than statements of historical fact, including statements
regarding the closing of the Purchases are forward-looking statements. In some cases, you can identify forward-looking statements by the
following words: “may,” “will,” “expect,” “plan,” “anticipate,” “believe,”
“approximately,” “potential,” or the negative of these terms or other comparable terminology, although the absence
of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements are based upon the Company’s
current assumptions, expectations and beliefs concerning future developments and their potential effect on the Company and the Purchases.
This information may involve known and unknown risks, uncertainties and other factors which may cause actual events, results, performance
or achievements to be materially different from the future events, results, performance or achievements expressed or implied by any forward-looking
statements. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although the Company
believes that its plans, intentions and expectations reflected in or suggested by the forward-looking statements in this Current Report
on Form 8-K are reasonable, the Company cannot assure stockholders and potential investors that these plans, intentions or expectations
will be achieved. Factors and risks that may cause or contribute to actual events, results, performance or achievements differing from
these forward-looking statements include, but are not limited to, for example, the Company’s ability to consummate the Purchases.
Except to the extent required by law, the Company undertakes no obligation to update or revise any forward-looking statements, whether
because of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or
otherwise.
The representations and warranties of the Company
contained in the Agreements have been made solely for the benefit of the parties thereto. In addition, such representations and warranties
(i) have been made only for purposes of the Agreements, (ii) in some cases, have been qualified by documents filed with, or furnished
to, the SEC by the Company before the date of the Agreements (and stockholders and investors should read the Agreements in the context
of the Company’s other public disclosures in order to have a materially complete understanding of the disclosures therein), (iii)
are subject to materiality qualifications contained therein which may differ from what may be viewed as material by stockholders and investors,
(iv) were made only as of the date of the Agreements or such other date as is specified therein, as applicable, and (v) have been included
in the Agreements for the purpose of allocating risk between the contracting parties rather than establishing matters as facts.
The Agreements, the summary of the Agreements
and the other disclosures included in this Current Report on Form 8-K are intended to provide stockholders and investors with information
regarding the terms of the Agreements, and not to provide stockholders and investors with any other factual information regarding the
Company or its subsidiaries or their respective business. You should not rely on the representations and warranties in the Agreements
or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or
affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the
Agreements, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Other than as disclosed
in this Current Report on Form 8-K, as of the date of this Current Report on Form 8-K, the Company is not aware of any material facts
that are required to be disclosed under the federal securities laws that would contradict the representations and warranties in the Agreements.
The Company will provide additional disclosure in its public reports to the extent that it is aware of the existence of any material facts
that are required to be disclosed under federal securities laws and that might otherwise contradict the representations and warranties
contained in the Agreements and will update such disclosure as required by federal securities laws. Accordingly, the Agreements should
not be read alone, but should instead be read in conjunction with the other information regarding the Company and its subsidiaries that
has been, is or will be contained in, or incorporated by reference into, the Forms 10-K, Forms 10-Q, Forms 8-K, proxy statements, registration
statements and other documents that the Company files with the SEC.