Item 1.01. Entry Into a Material
Definitive Agreement.
On June 5, 2019,
Medicine Man Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”)
with an accredited investor (the “Investor”). Pursuant to the Purchase Agreement, the Company agreed to sell to the
Investor and the Investor agreed to purchase, in a private placement, up to 7,000,000 shares (the “Common Shares”)
of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at a price of $2.00 per share
and warrants (the “Warrants”) to purchase 100% of the number of Common Shares sold. The Warrants are for a term of
three years and are exercisable at a price of $3.50. The Warrants and the Common Shares are sometimes referred to herein as the
“Securities”. At the initial closing on June 5, 2019, (the “Initial Closing”) the Company issued and sold
1,500,000 Common Shares and warrants to purchase 1,500,000 shares of Common Stock, for gross proceeds of $3,000,000.
The Purchase Agreement
contemplates the sale of additional shares of Common Stock, subject to certain closing conditions set forth in the Purchase Agreement,
as follows: (A) 3,500,000 shares of common stock and warrants to purchase 3,500,000 shares of Common Stock at a second closing
to be held on or before July 15, 2019; (B) 1,000,000 shares of common stock and warrants to purchase 1,000,000 shares of Common
Stock at a third closing; and (C) 1,000,000 shares of common stock and warrants to purchase 1,000,000 shares of Common Stock at
a fourth closing.
In addition, pursuant
to the terms of the Purchase Agreement, the Company agreed to use its best efforts to file a registration statement within one
year of the date of the Purchase Agreement to register the Common Shares and shares of Common Stock underlying the Warrants. If
such registration statement is not filed within one year, then upon demand, the Company shall file such registration statement
as required by the Investor. The Company also granted the Investor piggy back registration rights on any registration statement
filed by the Company, other than a registration statement on Form S-8 or Form S-3 and subject to customary underwriter cutbacks.
Pursuant to the
Purchase Agreement, the Company also agreed to certain prohibitions on filing registration statements, and future sale and issuance
of its Common Stock, subject to certain exceptions and granted the Investor certain rights of participation in future offerings,
subject to certain exceptions as set forth in the Purchase Agreement.
The Investor agreed
not to sell more than 25% of the Common Shares purchased within one year of the Initial Closing.
The Purchase Agreement
provides that in the event of a Public Information Failure as such term is defined in the Purchase Agreement, the Company shall
pay to the Investor one percent (or a maximum of eight percent) of the aggregate purchase price on every thirtieth day of such
failure until such failure is cured or such failure no longer prevents the Investor from selling such Securities.
In connection with the
Purchase Agreement, the Board of Directors of the Company approved board compensation to its directors as follows:
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Non-employee directors will receive a monthly cash retainer of $6,000
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Non-employee directors will receive a monthly cash retainer of $2,000 for service on each committee
of the Board
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The Chairman of the Board will receive an additional monthly cash retainer of $8,000
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In connection
with the sale of the Securities, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the
Securities Act of 1933, as amended, for transactions not involving a public offering, and/or Rule 506 thereunder.
The foregoing
descriptions of the Purchase Agreement and Warrant, do not purport to be complete and are subject to and qualified by reference
to the full text of such documents, which are attached as exhibits to this Form 8-K.