Current Report Filing (8-k)
September 16 2021 - 5:02PM
Edgar (US Regulatory)
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2021-09-10
2021-09-10
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AGRI:CommonSharesMember
2021-09-10
2021-09-10
0001826397
AGRI:SeriesWarrantsMember
2021-09-10
2021-09-10
iso4217:USD
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iso4217:USD
xbrli:shares
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): September 10, 2021
AGRIFORCE
GROWING SYSTEMS, LTD.
(Exact
Name of Registrant as Specified in Charter)
British
Columbia
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001-40578
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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|
(IRS
Employer
Identification
No.)
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300
- 2233 Columbia Street
Vancouver, BC,
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V5Y
0M6
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(Address
of principal executive offices)
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|
(Zip
Code)
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Registrant’s
telephone number, including area code: (604) 757-0952
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on which registered
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Common
Shares
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AGRI
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The
Nasdaq Capital Market
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Series
A Warrants
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AGRIW
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The
Nasdaq Capital Market
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FORWARD-LOOKING
STATEMENTS
This
Form 8-K and other reports filed by Registrant from time to time with the Securities and Exchange Commission (collectively, the “Filings”)
contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available
to, Registrant’s management as well as estimates and assumptions made by Registrant’s management. When used in the Filings
the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,”
“plan” or the negative of these terms and similar expressions as they relate to Registrant or Registrant’s management
identify forward-looking statements. Such statements reflect the current view of Registrant with respect to future events and are subject
to risks, uncertainties, assumptions and other factors relating to Registrant’s industry, Registrant’s operations and results
of operations and any businesses that may be acquired by Registrant. Should one or more of these risks or uncertainties materialize,
or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated,
expected, intended or planned.
Although
Registrant believes that the expectations reflected in the forward-looking statements are reasonable, Registrant cannot guarantee future
results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the
United States, Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results.
Item
1.01 Entry Into a Material Definitive Agreement
On
September 10, 2021, AgriForce Growing Systems, Ltd. entered into an agreement (“Agreement”) to acquire the intellectual property
(IP) from Manna Nutritional Group LLC (MNG), a privately held firm based in Boise, Idaho. The IP encompasses patent-pending technologies
to naturally process and convert grain, pulses and root vegetables, resulting in low-starch, low-sugar, high-protein, fiber-rich baking
flour products, as well as a wide range of breakfast cereals, juices, natural sweeteners and baking enhancers.
The
terms of the Agreement are as follows:
The
aggregate purchase price for the Purchased Assets (the “Purchase Price”) is up to $14,475,000, and shall consist
of the following, subject to the terms and conditions of this Agreement, as follows:
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(i)
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The
number of shares of Company’s common stock (rounded up to the nearest whole number),
restricted as to resale under Section 4(a)(2) of the Securities Act, equal to the quotient
of (i) $5,000,000 divided by (ii) a per share price equal to the average of the volume weighted
average price (“VWAP”) of the Company’s common shares for
the ten trading days immediately preceding the Due Diligence Deadline (as defined below)
(the “Closing Shares”). The Closing Shares, to be due on the Closing
Date, which Closing Shares are restricted as to resale and issued under a private placement
exempt from registration under Section 4(a)(2) of the Securities Act, are subject to release
of restriction and lockup on a quarterly basis over ten quarters commencing on the Closing
Date in equal amounts of shares over ten consecutive calendar quarters. The Closing Shares
are due and will be issued to MNG upon the date that is 180 days from the Effective Date
(September 10, 2021) (the “Due Diligence Deadline”), with such
due diligence being comprised of (the following three bullet points are the “KPIs”):
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●
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Receipt
and Tasting of Flours and Sweeteners by the Company;
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●
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Independent
Lab Testing of Flours and Sweeteners by the Company to confirm fiber, protein, and starch
content of such products meets the specifications provided by MNG; and
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●
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Completion
by the Company of Third-Party Engineering Process Analysis, included in the scope of work
outlined by Covert Engineers, dated August 11, 2021, for conceptual and preliminary plant
design for a Pilot Manufacturing Facility.
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(ii)
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$1,475,000
in cash, minus any amounts paid to MNG under (iii), payable to MNG at Closing;
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(iii)
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$725,000
in cash payable follows: (a) $225,000 payable on the Effective Date; and (b) $500,000 payable
within 120 days after the Effective Date, to reimburse MNG for, without limitation, satisfaction
of all the secured debt as listed in Section 2.04 of the Disclosure Schedules to the
Agreement (the “Secured Debt”).
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(iv)
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The
number of shares of Company’s common stock (rounded up to the nearest whole number)
to be issued in two tranches that equals (i) $8,000,000 divided by (ii) a per share price
equal to the VWAP of the Company’s common shares for the ten trading days immediately
before the issuance date of those shares (“Post-Closing Shares”).
$5,000,000 of the Post-Closing Shares will be issued on June 30, 2022, to be held in Escrow.
$3,000,000 of the Post-Closing Shares will be issued to MNG on December 31, 2022, to be held
in Escrow. All distributions and dividends attributable to the Post-Closing Shares (collectively,
“Dividends”) will accrue for the benefit of MNG and will be held
in Escrow pending release of the Post-Closing Shares, in which case all Dividends will be
released to MNG at the same time as the Post-Closing Shares are so released. Until Post-Closing
Shares are released from Escrow, all voting rights thereto shall be exercised as directed
by the Company’s Board of Directors. If a Patent is issued within 24 months of the
Closing Date, and such Patent is transferred to the Company free and clear of all encumbrances,
then the Post-Closing Shares shall be released from Escrow in four equal amounts commencing
on the date of issuance of the Patent and then for the three subsequent three-month anniversaries
thereof.
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In
the event that after 24 months from the closing date, a Patent does not issue from the IP, Buyer’s obligation to issue the Post-Closing
Shares and Dividends to MNG will be deemed null and void ab initio and will no longer be due and owing to MNG, and the Post-Closing
Shares shall be released from escrow and returned to the Company, and the Purchase Price shall be adjusted downward dollar for dollar.
The
Agreement also contains standard commercial reps and warranties, indemnification and covenants for a transaction of this nature.
Item
9.01 – Financial Statements and Exhibits.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date:
September 16, 2021
AGRIFORCE
GROWING SYSTEMS, LTD.
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By:
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/s/
Richard Wong
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Name:
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Richard
Wong
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Title:
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Chief
Financial Officer
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