Item 1.01 Entry into a Material Definitive Agreement.
On May 24, 2019 (the “Farm Boy Execution
Date”), Medicine Man Technologies (the “Company”), a Nevada corporation, entered into a binding term sheet (the
“Farm Boy Term Sheet”) with Farm Boy, LLC (“Farm Boy”) and Baseball 18, LLC (“Baseball”), each
a Colorado limited liability company, setting forth the terms of the acquisition by the Company of 100% of the capital stock and
assets of Farm Boy and Baseball respectively (the “Farm Boy Acquisition”).
The terms of the Farm Boy Term Sheet are
summarized as follows:
As consideration, the Company shall pay
a total purchase price of $5,937,500 (the Farm Boy Purchase Price”), subject to adjustment, consisting of $1,187,500 cash and 1,578,073 shares of its common stock,
par value $0.001 per share. The 1,578,073 shares was determined by averaging the closing price of Company’s common stock
for the five (5) days prior to the Farm Boy Execution Date, which equated to $3.01 per share.
The Farm Boy Purchase Price is predicated
on projected 2019 gross revenues of Farm Boy and Baseball. The Farm Boy Purchase Price will be adjusted to reflect the actual 2019
gross revenues on a date and method mutually agreed upon by the Company, Farm Boy and Baseball and memorialized in the Farm Boy
Long-Form Agreement (as defined below).
Additionally, Mr. Bob DeGabrielle shall
agree to join the Company’s Board of Directors for a period of one (1) year, renewable my mutual agreement between the Company
and Mr. DeGabrielle.
The obligations of the Company, Farm Boy
and Baseball under the Farm Boy Term Sheet are conditioned upon the satisfaction or mutual waiver of the following conditions (the
“Farm Boy Conditions”):
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i.
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regulatory approval of the Marijuana Enforcement Division;
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ii.
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approval from applicable state and local licensing authorities;
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iii.
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receipt of all required third party consents to allow for the Company’s assumption of Farm
Boy and Baseball contracts;
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iv.
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all of Farm Boy’ and Baseball’s capital stock and assets are transferred to the Company
free and clear of all liens, claims and security interests;
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v.
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the Company’s payment of $1,187,500 cash and 25% of the share component of the Farm Boy Purchase
Price to Farm Boy and Baseball; and
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vi.
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all additional conditions as set forth in the Farm Boy Term Sheet.
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The Farm Boy Term sheet contemplates the
parties entering into a long-form agreement and other ancillary documents to memorialize the Farm Boy Acquisition (the “Farm
Boy Long-Form Agreement”). In the event the Farm Boy Long-Form Agreement is not agreed to within one year of the Farm Boy
Execution Date and all of the Farm Boy Conditions are either satisfied or waived, the Farm Boy Acquisition shall be consummated
and governed by the terms of the Farm Boy Term Sheet.
On May 24, 2019 (the “Los Suenos
Execution Date”), the Company entered into a binding term sheet (the “Los Suenos Term Sheet”) with Los Suenos,
LLC (“Los Suenos”) and Emerald Fields Grow, LLC (“Emerald”), each a Colorado limited liability company,
setting forth the terms of the acquisition by the Company of 100% of the capital stock and assets of Los Suenos and Emerald respectively
(the “Los Suenos Acquisition”).
The terms of the Los Suenos Term Sheet
are summarized as follows:
As consideration, the Company shall pay
a total purchase price of $5,937,500 (the “Los Suenos Purchase Price”), subject to adjustment, consisting of $1,187,500
cash and 1,578,073 shares of its common stock, par value $0.001 per share. The 1,578,073 shares was determined by averaging the
closing price of Company’s common stock for the five (5) days prior to the Los Suenos Execution Date, which equated to $3.01
per share.
The Los Suenos Purchase Price is predicated
on projected 2019 gross revenues of Los Suenos and Emerald. The Los Suenos Purchase Price will be adjusted to reflect the actual
2019 gross revenues on a date and method mutually agreed upon by the Company, Los Suenos and Emerald and memorialized in the Los
Suenos Long-Form Agreement (as defined below).
The obligations of the Company, Los Suenos
and Emerald under the Los Suenos Term Sheet are conditioned upon the satisfaction or mutual waiver of the following conditions
(the “Los Suenos Conditions”):
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i.
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regulatory approval of the Marijuana Enforcement Division;
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ii.
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approval from applicable state and local licensing authorities;
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iii.
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receipt of all required third party consents to allow for the Company’s assumption of Los
Suenos and Emerald contracts;
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iv.
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all of Los Suenos’ and Emerald’s capital stock and assets are transferred to the Company
free and clear of all liens, claims and security interests;
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v.
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the Company’s payment of $1,187,500 cash and 25% of the share component of the Los Suenos
Purchase Price to Los Suenos and Emerald; and
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vi.
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all additional conditions as set forth in the Los Suenos Term Sheet.
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The Los Suenos Term sheet contemplates
the parties entering into a long-form agreement and other ancillary documents to memorialize the Los Suenos Acquisition (the “Los
Suenos Long-Form Agreement”). In the event the Los Suenos Long-Form Agreement is not agreed to within one year of the Los
Suenos Execution Date and all of the Los Suenos Conditions are either satisfied or waived, the Los Suenos Acquisition shall be
consummated governed by the terms of Los Suenos Term Sheet.
On May 31, 2019 (the “MesaPur Execution
Date”), the Company entered into a binding term sheet (the “MesaPur Term Sheet”) with Mesa Organics Ltd., Mesa
Organics II Ltd. and Mesa Organics III Ltd., each a Colorado limited liability company and collectively “MesaPur,”
setting forth the terms of the acquisition by the Company of 100% of the capital stock and assets of MesaPur (the “MesaPur
Acquisition”).
The terms of the MesaPur Term Sheet are
summarized as follows:
As consideration, the Company shall pay
a total purchase price of $12,012,758.20 (the “MesaPur Purchase Price”), subject to adjustment, consisting of $2,402,551.64
cash and 2,801,809 shares of its common stock, par value $0.001 per share. The 2,801,809 shares was determined by averaging the
closing price of Company’s common stock for the ten (10) days prior to the MesaPur Execution Date, which equated to $3.43
per share.
The MesaPur Purchase Price is predicated
on i) projected annual gross revenues of MesaPur, to be measured once all three MesaPur Colorado locations are open and operating,
and ii) the assumption of debts associated with the normal course of MesaPur’s business. The MesaPur Purchase Price will
be adjusted to reflect the actual gross revenue run rate on a date and using a method mutually agreed upon by the Company and MesaPur
and memorialized in the MesaPur Long-Form Agreement (as defined below).
The obligations of the Company and MesaPur
under the MesaPur Term Sheet are conditioned upon the satisfaction or mutual waiver of the following conditions (the “MesaPur
Conditions”):
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i.
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regulatory approval of the Marijuana Enforcement Division;
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ii.
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approval from applicable state and local licensing authorities;
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iii.
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receipt of all required third party consents to allow for the Company’s assumption of MesaPur
contracts;
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iv.
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all of MesaPur’s capital stock and assets are transferred to the Company free and clear of
all liens, claims and security interests;
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v.
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the Company’s payment of the MesaPur Purchase Price to MesaPur;
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vi.
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the execution of certain property leases and employment agreements; and
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vii.
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all additional conditions as set forth in the MesaPur Term Sheet.
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The MesaPur Term sheet contemplates the
parties entering into a long-form agreement and other ancillary documents to memorialize the MesaPur Acquisition (the “MesaPur
Long-Form Agreement”). At the closing of the MesaPur Long-Form Agreement, the Company shall enter into individual employment
agreements with certain individuals as set forth in the MesaPur Term Sheet.
In the event the MesaPur Long-Form Agreement
is not agreed to within one year of the MesaPur Execution Date and all of the MesaPur Conditions are either satisfied or waived,
the MesaPur Acquisition shall be consummated and governed by the terms of MesaPur Term Sheet.