U.S. 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):
August 10, 2016
MEDICINE MAN TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
| Nevada | 000-55450 | 46-5289499 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer ID No.) |
4880 Havana Street
Suite 102 South
Denver, Colorado 80239
(Address of principal executive offices)
(303) 371-0387
(Issuer’s Telephone Number)
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:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
Effective August 10, 2016, we executed a binding Term Sheet whereby we have reached an agreement to acquire Pono Publications Ltd. (“Pono”) and Success Nutrients, Inc. (“SNI”), each a Colorado corporation, in consideration for the issuance of an aggregate of 7 million shares of our Common Stock. As of that date our stock closed at a price of $1.80 resulting in a valuation for this acquisition of $12.6 million, which was reached as a result of arms length negotiation between the principals of each respective company.
Pono provides consulting services to the cannabis industry in Colorado and elsewhere. It is also the owner of a registered trademark, “Three A Light” through which it has published a book on how to cultivate marijuana. It initiated operations in late 2015 and has generated approximately $400,000 in revenue in the first seven months of operations in 2016.
The Pono Publications Inc. brand includes the Three A Light™ cultivation publication with a ‘Professional Grade’ version (scheduled for release by year end) being developed exclusively for both Three A Light™ and our current and future clients. This new cultivation protocol has already achieved yields in the 450-gram per square foot range of flowering canopy per year and is deployable in both greenhouse and indoor based cultivation facilities. In addition to having a consulting client in Las Vegas, since January of this year Pono has sold in excess of 800 of the Three A Light™ manuals listed for $500 on both their web site (www.threealight.com) and on Amazon.com.
The Success Nutrients brand provides one of the key underpinnings of the cultivation methodology and is essential to the overall Three A Light™ performance metric. With an investment of two years of research, development and intense testing, this product line was specifically formulated for the cannabis industry. Within nine months of commencement of operations, this new start up business has already achieved extraordinary growth, most recently generating $100,000 in sales in July 2016 (up from 1 st month sales of $4,000 in December 2015). (www.successnutrients.com)
The combination of these two new businesses is expected to allow us to establish a cultivation improvement offering to our existing and future cultivation facility owners not yet able to achieve these performance levels. Adoption of this new methodology is also expected to allow our clients the ability to vastly improve their existing cultivation performance metrics while maintaining the highest quality product. There are no assurances this will occur.
Based upon a successful acquisition and through the deployment of these new business elements, we expect to develop new service offerings as well as industry leading improvements in our current deliverables that should be ready for deployment and generate additional income by the fourth quarter of 2016. However, there are no assurances this will occur, or that we will generate additional income within the time frame referenced, or at all.
The agreement is subject to our due diligence as well as execution of more definitive agreements, which shall contain customary representations. Due diligence is expected to be completed within 60 days from the date of the Term Sheet.
As previously disclosed in our filings, we are also engaged in discussions with other third parties to acquire them. While no assurances can be provided it is anticipated that we will engage in additional acquisitions in the near future. Each of these proposed acquisitions will be synergistic to our existing business and is intended to continue our efforts to become a national, full service cannabis company.
Item 7.01 Regulation FD Disclosure
Our Press Release relating to the execution of the Term Sheet described above is attached as Exhibit 99.2 and is hereby incorporated.
Item 9.01 Financial Statements and Exhibits
(b) Exhibits. The following exhibits are included in this report:
|
No.
10.2 |
Description
Term Sheet between our company and Pono and SNI |
| 99.2 | Press Release Announcing Execution of Term Sheet |
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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 hereunto duly authorized.
| MEDICINE MAN TECHNOLOGIES, INC. | ||
| (Registrant) | ||
| Dated: August 12, 2016 | By: | /s/ Brett Roper |
|
Brett Roper,
Chief Operating Officer |
||
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Exhibit 10.2
Term Sheet
ACQUISITION of
PONO PUBLICATIONS LTD., and SUCCESS NUTRIENTS INC.
The proposed summary terms set forth below are set forth herein for discussion purposes only and except as noted herein below, are not binding, and are subject to, among other things, execution and delivery of definitive documentation and approval of each respective company’s shareholders. This document is intended to precede the creation of a Definitive Agreement that fully defines the various working parts of the acquisition process from both the Seller as well as Buyer perspectives.
| Parties |
Medicine Man Technologies, Inc., a Nevada Corporation (“Buyer”) and Pono Publications, Ltd, and Success Nutrients, Inc., , each a Colorado corporation, (hereinafter each a “Seller” and jointly referred to as the “Sellers”) |
| Transaction Summary | The parties hereto shall engage in a share exchange, whereby Buyer shall acquire all of the issued and outstanding securities of the Sellers in exchange for issuance of an aggregate of 7 million shares of Buyer’s Common Stock, representing approximately 41.2% of Buyer’s issued and outstanding securities upon closing the proposed transaction (the “Transactions” or “Share Exchange”). |
| Contemplated Closing Date | On or before 90 days from the date hereof. |
| Due Diligence |
Sellers shall afford to the legal counsel, employees, agents, and authorized representatives of the Buyer reasonable access at reasonable times, upon reasonable prior notice, to its properties, offices, files, agreements, books and records as may be necessary in order that the Buyer may have a full opportunity to conduct such investigations and due diligence reviews as it shall deem necessary in connection with the Transactions contemplated hereby. This process shall allow the Buyer to complete an audit of the Seller’s financial statements in a manner that is consistent with the Buyers public company requisites so that the Buyer may create PCAOB audited financial statements that will serve as the basis for acquisition by the Buyer. |
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| Purchase Price | An aggregate of 7,000,000 shares of Buyer’s Common Stock, to be issued to each Seller in such denominations as Buyer shall determine at the point of closing as defined within the definitive agreement(s) associated with this process. |
| Representations and Warranties | The definitive agreement(s) shall include customary representations, which may include, without limitation, organization and corporate power, authorization, no breach, valid and binding agreement, capitalization, subsidiaries, financial statements, no undisclosed liabilities, absence of certain developments, title to property, tax matters, contracts, intellectual property, litigation, brokerage, governmental consents, employee benefit plans, insurance, compliance with laws, environmental compliance, employee and labor relations, accounts, effect of transaction, transactions with affiliates, customers, software, customer accounts receivable, salaries of officers and directors. |
| Conditions |
Buyer shall have completed due diligence and be satisfied with the results thereof no later than 60 days from the date hereof, with the definitive agreement(s) executed no later than 90 days from the date hereof unless extended by the Buyer for a period of up to 45 days based upon material outstanding elements beyond its control; The Share Exchange shall be approved in accordance with the existing provisions of each, the Buyer and Seller’s shareholders and or Directors as such authority exists; The parties shall have performed, in all material respects, all of their obligations under the definitive agreements. All of the statements, representations and warranties contained in the definitive agreements shall be complete and true in all material respects. No material adverse changes shall have occurred in the business, properties and assets of Sellers other than changes set forth in the definitive agreement or occurring in the ordinary course of business. Each Seller shall provide an audited financial statement of its books and records by a duly qualified independent accountant in accordance with Generally Accepted Accounting Practices (“GAAP”) in a form acceptable to the US Securities and Exchange Commission.
The Buyer is authorized to disclose elements related to this acquisition as required by law including relevant 8K filings and press releases as customary with a material event.
Buyer shall agree to an employment agreement with Josh Haupt to hold positions with the Seller companies upon closing mutually agreeable between Buyer and him, including appointment of Mr. Haupt as a director of Buyer. |
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| Termination | Terminable (i) by mutual consent of the parties or (ii) by either party if the conditions to such party’s obligations are incapable of fulfillment or Transactions shall not have closed within 90 days from the date hereof. |
| Binding Provisions | Sellers shall not, either directly or indirectly, for a minimum of 120 days from the date hereof (herein called the “Exclusive Period” or unless extended in accordance with the Buyer’s provision as noted in the conditions section), enter into, or continue, any negotiations or discussions with any party in respect of the sale of either Seller or any assets owned by either Seller or any part thereof in any manner whatsoever to any person, in any manner which would be inconsistent or in competition with the matters and transactions contemplated by this Term Sheet. In the event Sellers breach this provision, Sellers shall be responsible for all costs incurred by Buyer herein, including but not limited to Buyer’s attorneys’ fees. |
| Amendment | Only by written consent of all of the parties hereto. |
| Governing Law/Venue | Nevada |
AGREED TO AND ACCEPTED this 10th day of August 2016.
MEDICINE MAN TECHNOLOGIES, INC.
By: /s/ Brett Roper
Brett Roper, Chairperson of the Board of Directors
PONO PUBLICATIONS LTD.
By: /s/ Josh Haupt
Josh Haupt, Principal Officer and Director
SUCCESS NUTRIENTS, INC.
By: /s/ Josh Haupt
Josh Haupt, Principal Officer and Director
Witnessed
By: s/ Paul Dickman
By: s/ James Toreson
AMENDMENT TO FOLLOW ON SUBSEQUENT PAGE
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This Amendment shall serve as authorization by Mr. Josh Haupt and Mr. Brett Roper of their approval of the modification noted below and at our next meeting we would put this into a written form of modification by affixing our signatures to this email correspondence as well as including our approval reply. This modification specifically applies to a Term Sheet as entered into on August 4, 2016 and would make this modification execution date as of today, August 9th, 2016 the effective date of final execution. If Josh Haupt would please reply all to this message and type in ACCEPTED to the 1st line, this in consideration of my ACCEPTANCE as of issuance of this message will suffice for the purposes of this modification's documentation.
The proposed summary terms set forth below are considered to be binding on both the Buyer and Seller and are subject to, among other things, execution and delivery of definitive documentation and the subsequent approval of each respective company’s shareholders. This document is intended to precede the creation of a Definitive Agreement that fully defines the various working parts of the acquisition process from both the Seller's as well as Buyer's perspectives. Should both parties find there is some material portion of the Definitive Agreement (to become a part of the 8K filing) or some other element that causes this Term Sheet to become non-viable (such as an inability to provide for audited financial statements, material misrepresentation by either party that cannot be corrected via mutual acceptance for continuation), both parties will arrive at such conclusion mutually, neither admitting any fault or cause of action by one to the other and announce mutually that this binding agreement as no longer valid, one to the other and publically as may be required by the Buyers being a public company.
Furthermore, each party to the agreement acknowledges that the interim costs of such due diligence, document creation, and any other related expense shall be the responsibility of party committing to such work (legal, accounting, etc.) except that any audited financial statement work completed on behalf of the Seller by the Buyer shall be retained by the Seller and become the Seller's responsibility to either pay for or reimburse the buyer based upon submission of such bills to the Seller, should this binding Term Sheet become non-viable as noted herein.
As noted in the conditions section the Seller is authorizing the Buyer to engage the professional services of its CFO, Auditor, and any other third parties in order to create the Audited Financial Statements sufficient for the purpose of facilitating this transaction. These expenses, based upon a successful acquisition shall be borne by the Buyer.
Agreed to this date, August 10, 2016 by both principals representing the Buyer and Seller, Josh Haupt (seller) and Brett Roper, (buyer) via a reply to all response to this email by each, verifying acceptance of this modification.
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Exhibit 99.2
MEDICINE MAN TECHNOLOGIES INC. TO ACQUIRE PONO PUBLICATIONS AND SUCCESS NUTRIENTS
DENVER – August 15, 2016. Medicine Man Technologies Inc. (OTCQB: MDCL), one of the country’s leading cannabis branding and consulting companies, announced today that it has agreed in principle to acquire Pono Publications Inc. and Success Nutrients Inc., each a Colorado corporation. The closing of this transaction is subject to due diligence and execution of more definitive agreements, which is expected to occur on or before November 9, 2016. The consideration to be paid by Medicine Man Technologies includes the issuance of 7 million shares of Medicine Man Technologies’ common stock and retention of key team member employment consideration.
The Pono Publications Inc. brand includes the Three A Light TM cultivation publication with a ‘Professional Grade’ version (scheduled for release by year end) being developed exclusively for both Three A Light TM and Medicine Man Technologies clients. This new cultivation protocol has already achieved yields in the 450-gram per square foot range of flowering canopy per year and is deployable in both greenhouse and indoor based cultivation facilities. In addition to having a consulting client in Las Vegas, since January of this year, Pono Publications has sold in excess of 800 of the Three A Light TM manuals listed for $500 on both their web site (www.threealight.com) and on Amazon.com.
The Success Nutrients brand provides one of the key underpinnings of the cultivation methodology and is essential to the overall Three A Light TM performance metric. With an investment of two years of research, development and intense testing, this product line was specifically formulated for the cannabis industry. Within nine months of operations, this new start up business has already achieved extraordinary growth, most recently generating $100,000 in sales in July (up from 1 st month sales of $4,000 in December 2015). While there can be no assurances, recent inquiries suggest this company will be growing considerably in the upcoming year (www.successnutrients.com).
The combination of these two new businesses is expected to allow Medicine Man Technologies to establish a cultivation improvement offering to existing cultivation facility owners not yet able to achieve these extraordinary performance levels. Adoption of this new methodology is also expected to allow most business owners the ability to vastly improve their existing cultivation performance metrics while maintaining the highest quality product.
Josh Haupt, Principal and Founder of Pono Publications and Success Nutrients stated, “After spending many years in development of both my proprietary nutrient line and cultivation methodologies, I am pleased to have found a new partnership opportunity in which I truly believe my companies will be able to grow with. The fact that Medicine Man Technologies is also a well-known presence in the cannabis industry should allow us to add substantial value back to the business as a whole while making more efficient use of our mutual resources.”
Brett Roper, MMT’s COO and Co-Founder noted, “As we continue to search for opportunities within our industry we were amazed to find such a remarkable opportunity so close to home. The fact that these two ventures are so well developed and already generating cash flow as well as profits is extraordinary and we are excited to add these two new elements to our brand warehouse deployment. Additionally, Success Nutrients, in combination with Pono Publications and Three A Light TM add a whole new depth of value to the current Medicine Man Technologies cultivation deployment initiatives we are deploying nationwide for our clients.”
Andy Williams, MMT’s CEO and Co-Founder added, “Prior to touring Josh Haupt’s cultivation facilities, I had never met an industrial cultivator of cannabis that was better than Medicine Man. Now I have. I believe Josh Haupt and Three A Light TM are hands down the best industrial cultivators of cannabis in the world. I could not be more excited to welcome Pono Publications and Success Nutrients to Medicine Man Technologies. The revenue and earnings potential of both products are tremendous. Paired with the leadership and charisma that Josh Haupt will bring to our executive management team and the synergies of our current product and service portfolio, the potential growth on all product and service fronts is exciting.”
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About Medicine Man Technologies
Established in March 2014, Medicine Man Technologies secured its first client/licensee in April 2014. To date, the company has provided guidance for numerous clients (Colorado, Nevada, California, Oregon, Arizona, and Illinois) that have successfully secured licenses or partnered with other enterprises to operate cannabis businesses within their state. Medicine Man Technologies currently has 24 active clients in 13 states, focusing on working with licensees and clients to:
| · | Utilize management experience, technology, and training to help secure a license |
| · | Deploy the company’s highly effective variable capacity constant harvest cultivation practices and eliminate the liability of single grower dependence |
| · | Avoid the costly mistakes generally made in start-up by taking advantage of the experience of Medicine Man Technologies’ principals in developing a cannabis business |
| · | Stay engaged with an ever-expanding team of licensees all focused on quality and safety that will ‘share’ the ever-improving experience and knowledge of the network |
Safe Harbor Statement
This press release may contain forward looking statements which are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially from those anticipated or expected, including statements related to the amount and timing of expected revenues and any payment of dividends on our common and preferred stock, statements related to our financial performance, expected income, distributions, and future growth for upcoming quarterly and annual periods. These risks and uncertainties are further defined in filings and reports by the Company with the U.S. Securities and Exchange Commission (SEC). Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors detailed from time to time in our filings with the Securities and Exchange Commission. Among other matters, the Medicine Man Technologies may not be able to sustain growth or achieve profitability based upon many factors including, but not limited to, general stock market conditions. Reference is hereby made to cautionary statements set forth in the company’s most recent SEC filings. We have incurred and will continue to incur significant expenses in our expansion of our existing and new service lines, noting there is no assurance that we will generate enough revenues to offset those costs in both the near and long term. Additional service offerings may expose us to additional legal and regulatory costs and unknown exposure(s) based upon the various geopolitical locations where we will be providing services, the impact of which cannot be predicted at this time.
Contact Information:
Attention Brett Roper via info@medicinemantechnologies.com
Telephone (303) 371-0387
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