Item 8.01. Other Events.
On January 25, 2022, the Company completed its
previously announced asset purchase from BG3 Investments, LLC, dba Drift (“BG3”), and Black Box Licensing, LLC (“Black
Box”, and together with BG3, individually, “Seller” and collectively, “Sellers”), pursuant to the terms
of the Asset Purchase Agreement (as amended by Amendment No. 1 to Asset Purchase Agreement, dated as of October 28, 2021, together the
“APA”), dated June 25, 2021, by and among the Company, Double Brow, LLC, a wholly-owned subsidiary of the Company (the “Purchaser”),
BG3, Black Box, and Brian Searchinger, the sole equityholder of BG3 and an equityholder of Black Box (the “Equityholder”).
At the closing, the Purchaser (i) purchased the
Sellers’ assets used in or held for use in or related to the operation of the Sellers’ business of distributing, marketing
and selling recreational cannabis products, including certain intellectual property rights and the leases for two dispensary retail stores
located in Boulder, Colorado, other than certain excluded assets (the “Asset Purchase”), and (ii) assumed obligations under
contracts acquired as part of the Asset Purchase, in each case, on the terms and conditions set forth in the APA.
The aggregate closing consideration for the Asset
Purchase was (i) $1,915,750 in cash, of which $15,750 was a reimbursement for security deposits on the Leased Real Property (as defined
in the APA); $266,190.50 was paid to BG3, and $1,418,559.50 was paid to Black Box, and (ii) 912,666 shares of the Company’s common
stock issued to BG3 (the “Drift Shares”). The Company may be required to issue up to 154,000 additional shares of common stock
as consideration, which the Company is holding back as collateral for indemnification from the Sellers and Equityholder under the APA.
Any portion of the held-back stock consideration not used to satisfy indemnification claims will be released as follows: (i) 50% of the
held-back stock consideration will be released on June 30, 2022; and (ii) 50% of the held-back stock consideration will be released on
December 31, 2022. The Company funded the cash portion of the closing consideration from cash on hand.
The Company entered into a lock-up agreement with
BG3 and the beneficial owners of the Drift Shares providing limitations on the resale of the Drift Shares.
The descriptions of the APA and the transactions
contemplated thereby contained in Item 1.01 of the Company’s Current Report on Form 8-K filed on July 1, 2021 (the “Prior
8-K”) is incorporated herein by reference. The summary of the APA and the transactions contemplated thereby contained in the Prior
8-K and above does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the APA (including
the amendment), filed as Exhibit 2.1 to the Prior 8-K and incorporated herein by reference and Exhibit 99.2 to this Current Report on
Form 8-K.