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):
May 2, 2018
KUSH
BOTTLES, INC.
(Exact name of registrant as specified in
its charter)
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Nevada
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000-55418
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46-5268202
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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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1800 Newport Circle, Santa Ana, CA
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92705
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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:
(714) 243-4311
(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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Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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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
x
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.
x
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Item 1.01.
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Entry into a Material
Definitive Agreement.
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On May 2, 2018, Kush Bottles, Inc.
(the “Company”) completed its previously announced acquisition of Summit Innovations, Inc. (“Summit”). Pursuant to
the terms of the Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Summit, KCH
Energy, LLC, a wholly owned subsidiary of the Company (“Merger Sub”) and Mark Driver, in his capacity as
Member Representative, Summit merged with and into Merger Sub, with Merger Sub surviving the merger as a wholly-owned
subsidiary of the Company (the “Merger”).
T
he
consideration paid to the members of Summit (the “Members”) at the closing included an aggregate of $3.2 million in
cash (the “Cash Consideration”), as adjusted to reflect estimated working capital, indebtedness and transaction expenses
as of the closing date, and an aggregate of 1,280,000 shares (the “Share Consideration”) of the Company’s common
stock (the “Common Stock”). $500,000 of the Cash Consideration and approximately 640,000 shares of Common Stock from
the Share Consideration were
held back by the Company for a period of 15 months (the “Holdback Period”) for
potential post-closing working capital and/or indemnification claims relating to, among other things, breaches of representations,
warranties and covenants contained in the Merger Agreement.
The Members may become entitled
to receive earn-out consideration of up to an additional 1,280,000 shares of Common Stock, in the aggregate, based on the performance
of the Summit business during a one year period following the closing.
A copy of the Merger Agreement was filed
as Exhibit 2.1 to the Form 8-K filed by the Company with the Securities and Exchange Commission on April 10, 2018 and is incorporated
herein by reference. The foregoing description of the Merger Agreement
does not purport to
be complete and is subject to, and qualified in its entirety by reference to, the full text of
the Merger Agreement.
Concurrently
with the completion of the Merger, the parties to the Merger Agreement entered into an amendment to the Merger Agreement (the “Amendment”)
to correct certain scriveners’ errors, including the length of the
Holdback Period
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The foregoing description of the Amendment does not purport to be complete and is subject to, and qualified in its entirety by
reference to, the full text of the Amendment, a copy of which is filed as Exhibit 2.2 hereto and is incorporated by reference herein.
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Item 2.01.
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Completion of Acquisition
or Disposition of Assets.
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The information set forth in Item 1.01 above relating to the
Merger Agreement and the transactions contemplated thereby, including the Merger, is incorporated herein by reference.
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Item 3.02.
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Unregistered Sales of
Equity Securities.
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The information
set forth in Item 1.01 above relating to the Merger Agreement and the transactions contemplated thereby is incorporated herein
by reference. The issuance of shares of Common Stock to the Members was not, and will not be, registered under the Securities Act
of 1933, as amended (the “Securities Act”), pursuant to an exemption from the registration requirements provided by
Section 4(a)(2) thereof and Rule 506(b) of Regulation D thereunder. The shares of Common Stock issued to the Members are and will
be “restricted securities” for purposes of Rule 144 and subject to certain requirements before sale, including holding
period requirements, unless sold pursuant to an effective registration statement under the Securities Act.
On May 3, 2018,
the Company issued a press release announcing the closing of the Merger. A copy of the press release is filed herewith as Exhibit
99.1.
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Item 9.01.
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Financial Statements
and Exhibits.
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(a) Financial Statements of Business Acquired.
Any financial statements required by Item 9.01(a) will be filed
by amendment as soon as practicable, but no later than 71 calendar days after the date on which this initial Current Report on
Form 8-K was required to be filed.
(b) Pro Forma Financial Information.
Any pro forma financial information required by Item 9.01(b)
will be filed by amendment as soon as practicable, but no later than 71 calendar days after the date on which this initial Current
Report on Form 8-K was required to be filed.
(d) Exhibits.
Exhibit
Number
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Title
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2.1*
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Agreement and Plan of Merger, dated April 10, 2018, by and among Kush Bottles, Inc., KCH Energy, LLC, Summit Innovations, LLC and Mark Driver (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Kush Bottles, Inc. on April 10, 2018).
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2.2
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Amendment to Agreement and Plan of Merger, dated May 2, 2018, by and among Kush Bottles, Inc., KCH Energy, LLC, Summit Innovations, LLC and Mark Driver.
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99.1
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Kush Bottles, Inc. Press Release dated May 3, 2018.
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*
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Schedules (and similar attachments) have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish to the Securities and Exchange Commission a copy of such schedules and exhibits, or any section thereof, upon request.
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SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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KUSH BOTTLES, INC.
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(Registrant)
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May 3, 2018
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/s/ Nicholas Kovacevich
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(Date)
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Nicholas Kovacevich
Chairman and Chief Executive Officer
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INDEX TO EXHIBITS
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Exhibit
Number
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Description of Exhibit
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2.1*
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Agreement and Plan of Merger, dated April 10, 2018, by and among Kush Bottles, Inc., KCH Energy, LLC, Summit Innovations, LLC and Mark Driver (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Kush Bottles, Inc. on April 10, 2018).
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2.2
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Amendment to Agreement and Plan of Merger, dated May 2, 2018, by and among Kush Bottles, Inc., KCH Energy, LLC, Summit Innovations, LLC and Mark Driver.
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99.1
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Kush Bottles, Inc. Press Release dated May 3, 2018.
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*
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Schedules (and similar attachments) have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish to the Securities and Exchange Commission a copy of such schedules and exhibits, or any section thereof, upon request.
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Exhibit 2.2
AMENDMENT TO THE AGREEMENT AND PLAN OF
MERGER
THIS AMENDMENT TO THE AGREEMENT
AND PLAN OF MERGER, dated as of May 2, 2018 (this “
Amendment
”) among Kush Bottles, Inc., a Nevada corporation
(“
Parent
”), KCH Energy, LLC, a Colorado limited liability company (“
Merger Sub
”), Summit
Innovations, LLC, a Colorado limited liability company (the “
Company
”) and Mark Driver, an individual, solely
in his capacity as the Member Representative. Capitalized terms used but not defined herein shall have the meanings ascribed to
such terms in the Merger Agreement (as defined below).
RECITALS
WHEREAS, the parties hereto entered
into that certain Agreement and Plan of Merger, dated April 10, 2018 (the “
Merger Agreement
”); and
WHEREAS, the parties hereto wish
to amend the Merger Agreement in accordance herewith.
AGREEMENT
In consideration of the foregoing,
and intending to be legally bound, the parties hereby agree as follows:
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1.
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Definitions.
The definition of “Holdback Release Date” in Article I of the
Merger Agreement shall be amended and restated in its entirety as follows:
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“‘
Holdback Release Date
’
means the first Business Day following the fifteen (15) month anniversary of the Closing Date.”
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2.
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Section 8.02(e).
Section 8.02(e) of the Merger Agreement shall be amended and restated in its entirety as follows:
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“the amount of any accounts receivable included
in the Current Assets or listed on
Section 3.14
of the Disclosure Schedules, to the extent such amounts do not become collectible
in full by the fifteen (15) month anniversary of the Closing Date;”
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3.
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Section 10.01(a)(vii).
Section 10.01(a)(vii) of the Merger Agreement shall be amended and
restated in its entirety as follows:
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“make all elections or decisions contemplated
by this Agreement and any Ancillary Document;”
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4.
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Ancillary Documents.
From the date hereof, all references to “Transaction
Documents” within the Merger Agreement shall instead be deemed references to “Ancillary Documents.”
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5.
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This Amendment may be executed in two or more counterparts, all of which
shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
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6.
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As applicable, Article X of the Merger Agreement shall apply
mutatis mutandis
to this Amendment.
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7.
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Except as expressly set forth herein, this Amendment shall not by implication
or otherwise alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained
in the Merger Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect.
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[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned have
executed this Amendment as of the date first above written.
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COMPANY
SUMMIT INNOVATIONS, LLC
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By:
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/s/ Mark Driver
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Name:
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Mark Driver
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Title:
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Manager
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PARENT
KUSH BOTTLES, INC.
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By:
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/s/ Nicholas Kovacevich
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Name:
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Nicholas Kovacevich
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Title:
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Chairman and CEO
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MERGER SUB
KCH ENERGY, LLC
By: Kush Bottles, Inc., its sole Member
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By:
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/s/ Nicholas Kovacevich
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Name:
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Nicholas Kovacevich
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Title:
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Chairman and CEO
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MEMBER REPRESENTATIVE
Mark Driver,
solely in his capacity as Member Representative
/s/ Mark Driver
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Name: Mark Driver
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[Signature Page to Amendment to Agreement and Plan of Merger]
Exhibit 99.1
Kush Bottles Closes Acquisition of Summit
Innovations, LLC
SANTA
ANA, Calif., May 3, 2018
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Kush Bottles, Inc.
(OTCQB: KSHB) (“Kush Bottles” or the “Company”),
a leading provider of
packaging,
supplies,
vaporizers,
hydrocarbon gases,
solvents,
accessories
and
branding
solutions
for the regulated cannabis industry, announced today it has completed its acquisition of Summit Innovations, LLC
(“Summit Innovations”), a leading distributor of hydrocarbons to the legal cannabis industry based in Denver, Colorado.
Summit Innovations was acquired in exchange for 1,280,000 shares of Kush Bottles common stock and approximately $3.2 million in
cash subject to certain adjustments and holdbacks, as further described in the Company’s press release dated
April 10,
2018
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Hydrocarbon gases are used to convert
cannabis plants into oils, and this acquisition marks Kush Bottles’ entry into a new business vertical supplying gas to
cannabis extractors. Summit Innovations operates seven distribution facilities located across the country. Its four core products
are high purity butane, propane, iso-butane and blends. Summit Innovations works closely with legal cannabis manufacturers to
ensure cleanliness, product quality, safety and compliance during the extraction process.
“We are pleased to close this acquisition
and secure our entry into the hydrocarbon segment of the cannabis market,” commented, Nicholas Kovacevich, CEO and Chairman
of Kush Bottles. “Gas is the lifeblood of the cannabis market and Summit Innovations offers a broad range of hydrocarbon
gases that meet the complex needs of cannabis extractors across the country. By bringing Summit Innovations under the Kush Bottles
umbrella, we expect to leverage synergies in our distribution channels to grow sales at both Summit and our existing business
lines. This is a major step forward in our strategy to position Kush Bottles as a one-stop shop for any business looking to operate
responsibly within the legal cannabis market.”
The Company continues to evaluate new
technologies and developments within the industry as it builds out a diversified suite of products and services that are integral
to the proper functioning of the cannabis supply chain.
Kush Bottles will issue up to an additional
1,280,000 shares of Kush Bottles common stock if the Summit Innovations business achieves certain earn-out milestones of up to
$12.0 million in eligible revenues during the twelve-month period following closing.
To be added to the distribution list,
please email
ir@kushbottles.com
with “Kush” in the subject line.
###
About Kush Bottles
Kush Bottles, Inc. (OTCQB: KSHB) is a
dynamic sales platform that provides unique products and services for both businesses and consumers in the cannabis industry.
Founded in 2010 as a packaging and supplies company for dispensaries and growers, Kush Bottles has sold more than 1 billion units
and now regularly services more than 5,000 legally operated medical and adult-use dispensaries, growers, and producers across
North America, South America, and Europe. The Company has facilities in the three largest U.S. cannabis markets and a local sales
presence in every major U.S. cannabis market.
Kush Bottles aims to be the gold standard
for responsible and compliant products and services in the cannabis industry. Kush Bottles has no direct involvement with the
cannabis plant or any products that contain THC.
The Company has been featured in media
nationwide, including CNBC, Los Angeles Times, TheStreet.com, Entrepreneur, and business magazine Inc.
For more information, visit www.kushbottles.com or
call (888)-920-5874.
Forward-Looking Statements
This press release may include predictions,
estimates or other information that might be considered forward-looking within the meaning of applicable securities laws. While
these forward-looking statements represent the Company’s current judgments, they are subject to risks and uncertainties
that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements,
which reflect the opinions of the Company’s management only as of the date of this release. Please keep in mind that the
Company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements
in light of new information or future events. When used herein, words such as: “potential,” “look forward,”
“believe,” “expect,” “dedicated,” “building,” or variations of such words and
similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially
from those contemplated in any forward-looking statements made by the Company herein are often discussed in filings the Company
makes with the United States Securities and Exchange Commission (SEC), available at: www.sec.gov, and on the Company’s
website, at: www.kushbottles.com.
Kush Bottles Contacts
Media Contact:
Anne Donohoe / Nick Opich
KCSA Strategic Communications
212-896-1265 / 212-896-1206
adonohoe@kcsa.com / nopich@kcsa.com
Investor Contact:
Phil Carlson / Elizabeth Barker
KCSA Strategic Communications
212-896-1233 / 212-896-1203
ir@kushbottles.com