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):
October 18, 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
(a) We previously reported that we executed a binding term sheet on Aug. 12, 2016, whereby we agreed to acquire Pono Publications Ltd. (“Pono”) and Success Nutrients, Inc. (“SNI”), both Colorado corporations, in consideration for the issuance of an aggregate of 7 million shares of our common stock. While we continue to negotiate the terms of a definitive agreement with Pono and SNI, and complete due diligence efforts, on Oct. 18, 2016, we executed an Interim Products and Services Support Agreement with both companies (the “Interim Agreement”). This Interim Agreement is intended to act as a “bridge” to allow us to work with both Pono and SNI to perpetuate our respective business plans and take advantage of our synergy during the time the definitive agreements are being completed
Pono provides consulting services to the cannabis industry in Colorado and elsewhere, and includes the Three A Light TM cultivation publication. This new cultivation protocol has achieved repeated yields, verified through Metrc TM , in the 750-gram per square foot range of flowering canopy per year, and is deployable in both greenhouse and indoor cultivations.
The SNI 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.
Among other things, the interim agreement allows us to:
| · | Leverage Pono’s disruptive cultivation technology to enhance the already successful industrial operation of Medicine Man, an affiliate company, for both current and future production; |
| · | Engage Pono professional services and support in the deployment of their methodologies in fulfillment of our consulting agreements with our clients; |
| · | To have planned, reasonable access to Pono’s Colorado-based Three A Light TM grow facilities tours and support of consulting services; |
| · | Feature SNI as our recommended and exclusive nutrient line; and externally market the Pono and SNI names and product lines, subject to their final approval. |
We will share net revenues with Pono and SNI, as applicable and expect to also benefit from the anticipated generation of new clients, and sharing of intellectual property.
A copy of the Interim Agreement is attached to this report as Exhibit 10.3, and is incorporated herein as if set forth.
(b) In a Form 8-K dated July 26, 2016, we reported that we had signed a non-binding term sheet to acquire Capital G Ltd, an Ohio limited liability company and its three wholly owned subsidiary companies, Funk Sac LLC, Commodigy LLC, and OdorNo LLC, in consideration for the issuance of an aggregate of 1.3 million shares of our common stock. We believe that this transaction remains viable; however, the due diligence efforts are taking longer than expected. While we remain optimistic that this acquisition will be successful, the successful closing of this transaction is dependent on the outcome of our due diligence. As part of the terms included in the term sheet, we had agreed to provide Capital G Ltd. with $250,000 in convertible debt, which we have done. This note is for a one year term and accrues interest at 12% per annum.
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Item 8.01 Other Events
(a) As a result of our relationship with Pono and SNI referenced in Item 1.01, we have recently launched a new product branded Cultivation MAX, wherein we are providing cultivation advisory services to existing operators wanting to increase their yields through deployment of our combined efficiencies. As of the date of this report, we have generated our initial two clients for these services in California and are actively working with those teams to improve their cultivation practices. We anticipate revenues related to this new deployment to include design fees as well as income derived by formula arising from the anticipated improvement experienced in our client's cultivation practices. This is generally based upon pounds per light or grams per square foot of canopy within the individual cultivation facility. While no assurances can be provided, we believe this future income stream may be substantial based upon current performance levels noted in the cannabis cultivation landscape within states allowing for access of such related products. This assumption is further based upon the improved performance metrics of 750 grams per square foot on an annualized basis as more fully described in section 1.01 above.
(b) Including the two new clients referenced in (a), above, we have generated a total of ten new clients in the month of October, 2016, alone. These new clients include three new cultivation support and two new dispensary support licensing agreements with clients in Pennsylvania, two cultivation agreements in in Puerto Rico and one new general support services agreement with a Florida-based client. This fills our available capacities in Pennsylvania when added to our existing support commitments. We expect that these agreements will generate significant new income for us through the first calendar quarter of 2017. While no assurances can be provided, we also expect new legislative initiatives in Ohio and Michigan to generate new clients, extending into the beginning of next year. In addition, we anticipate significant opportunities arising from the nine new cannabis initiatives included in state elections this November. Adoption of all, or a significant number of these initiatives, is expected to provide us with new opportunities to expand our consulting services and relationships. There are no assurances this will occur.
(c) Effective Friday, Oct. 14, 2016, we engaged in an initial closing of private offering of convertible notes in the aggregate amount of $500,000 from four accredited investors. Our anticipated use of proceeds of these funds will be related to 1) cost of consummating the acquisitions described in Item 1.01, above; 2) hiring additional employees in anticipation of our continued growth, including employees in the areas of facilities design, licensing and application support, and cultivation training; 3) additional marketing and industry advertising; 4) working capital, including capital to be used in expanding our ‘branding warehouse’ approach to support growth. These notes accrue interest at a rate of 12% per annum and may be converted to stock in the discretion of the lender at a price of $1.75 per share or 90% of a five date VWAP, whichever is lower. The notes mature in December 2018.
Item 9.01 Financial Statements and Exhibits
(b) Exhibits. The following exhibits are included in this report:
|
No.
10.3 |
Description
Interim Products and Services Support Agreement with Pono and SNI |
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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: October 20, 2016 | By: | /s/ Brett Roper |
|
Brett Roper,
Chief Operating Officer |
||
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Exhibit 10.3
INTERIM PRODUCTS AND SERVICES SUPPORT AGREEMENT
This Interim Products and Services Support Agreement made and entered into as of this 18th day of October 2016, by and between Medicine Man Technologies, Inc. a Nevada Corporation (hereinafter referred to as “MMT”) and Pono Publications Ltd. (“Pono”) and Success Nutrients, Inc. (“SNI”), each a Colorado corporation is defined as follows.
WHEREAS “MMT” entered into a binding term sheet to acquire “Pono” and “SNI” on about August 12, 2016 and reaffirming that both parties to that agreement are desiring to continue to work to fulfill the general terms and conditions of that agreement;
WHEREAS both parties are now stipulating to the terms and conditions as included in this interim agreement as a ‘bridge’ to work together in the interim and in an effort to continue working to complete the acquisition as stipulated to in that binding term sheet (see Exhibit A);
WHEREAS both parties further agree that “Pono” also represents the current Three A Light ® brand as well as future iterations including but not limited to Three A Light Pro (to be registered) as well as the professional services of Joshua Haupt, its founder and noting that further and future improvements to that existing cultivation technology platform are also included in the scope of this agreement;
WHEREAS both parties agree that the professional services and experience of Joshua Haupt will be included as a part of the “Pono” corporate envelop;
Both parties hereby agree to the following:
That “MMT” is hereby authorized to represent its consulting services pertaining to general cultivation efficiencies, skills, and services as demonstrated by “Pono” in its current and future products line(s) and that “Pono” shall supply professional services and support for deployment of such professional services and support as may be mutually agreed upon during the term of this agreement.
That “MMT” shall maintain its clients benefiting from such value as “Pono” provides working with “Pono” to schedule professional services and support for marketing, training, and general fulfillment of the terms and conditions of such consulting service agreements “MMT” shall have with its clients. This support shall include but not be limited to planned reasonable access to Joshua Haupt’s Colorado based grow facilities that implement Three A Light and Joshua Haupt and/or his designated Pono Master Grower Employee for tours and discussions as may be needed to better define consulting services and values offered through this relationship, access to “Pono” and Joshua Haupt and/or his designated Pono Master Grower Employee for meetings related to facility design, fulfillment, training, and other related professional services and support as may be agreed to from time to time as it relates to this agreement.
That “Pono” shall be entitled to pre-agreed upon professional service and support fees, plus be reimbursement of any hard costs and/or approved travel expenses related to the general fulfillment of the terms of this agreement and that such terms shall be considered ‘fluid’ based upon variations of the existing and future “MMT” client base and its consulting services agreement with such client, and as such shall be negotiated to in good faith as necessary to further the relationship between all parties.
That “Pono” shall extend all reasonable discounts for its professional services and support to “MMT” and/or MMT’s clients as “Pono” deems appropriate and that both parties will work together to insure best practices are deployed in the general delivery of all professional services and support of “MMT” clients.
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That “SNI” shall be featured as “MMT’s” exclusive nutrient line and all sales and support relative to “MMT’s” securing of “SNI” clients shall be “SNI’s” responsibility with support from Joshua Haupt and “SNI”, and both parties acknowledge the need to work together in servicing such clients.
That “SNI” shall extend all reasonable discounts ranging between 20-40% off established retail price based on the order quantity and client support services to “MMT” clients as “SNI” deems appropriate and that both parties will work together to insure best practices are deployed in the general deliver of all customer service and support of “MMT” clients.
That “Pono” and “SNI” agree to allow their names and product lines to be marketed externally by “MMT” but shall maintain final approval authority (“Pono” and “SNI” via Joshua Haupt) for such external advertising prior to release. That “MMT” allow for reciprocity in the same manner to “Pono” and “SNI” noting Brett Roper shall be responsible for final approvals of any such external advertising or promotional element.
That “Pono” and “SNI” shall be featured in various internal advertising on the “MMT” website and that all related support for the creation of these elements shall be coordinated and approved by Joshua Haupt, the sole “Pono” and “SNI” representative.
That both parties shall be responsible for their own internal costs of operations and marketing but noting that both parties shall offer each other opportunities for mutual marketing of products and services as each may deploy, each at the expense of each party as it relates to the hard costs of participation. That “MMT” will continue to market “Pono” and “SNI” products and services at all trade shows, seminars, and other public appearance opportunities as reasonably possible and that both “Pono” and “SNI” shall reciprocate as reasonably possible.
That both parties agree that all licensing services (not related to Cultivation MAX and or other services that may be deployed in the future and as mutually agreed upon by both parties to this agreement), wherein “MMT” is recommending the use of “SNI” and wherein the licensing services client may also benefit from cultivation and facility design elements mutually generated by both parties, that the hard costs of acquisition and servicing such clients from a direct cost standpoint shall also reduce the final compensation of each partner to this agreement.
That both parties agree that compensation, one to another for all mutual clients and expense burden shall be defined as provided in Exhibit “B” to this Agreement, included herein as if set forth.
Should “Pono” or “SNI” representatives attend conferences or conventions “MMT” is sponsoring, it is agreed that while fees related to the general presence at the event are “MMT’s” responsibility, “Pono” and “SNI” attendees shall pay the costs related to general attendance and all travel expense at such events and by way of reference, the same shall apply in the reverse should “MMT” attend events “Pono” or “SNI” are supporting.
Other Terms
Both parties hereby agree that this Interim Product and Services Support Agreement shall remain in effect until either 1) the existing acquisition process is successfully completed, 2) both partied mutually agree that this agreement shall be discontinued via a ninety (90) notice one to each other, or 3) it is replaced by a more permanently structured future agreement.
Both parties hereby agree that “MMT” will craft an 8K explaining the extension of time needed to complete the acquisition as initially envisioned and that this interim agreement will basically provide for an orderly transition to completion of the acquisition process.
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Both parties hereby agree that both Colorado and Nevada law may be used in any final interpretation of this agreement based upon the domicile of each company and that both shall agree that all disputes, claims, and controversies concerning the validity, interpretation, performance, or breach of this agreement shall be construed in accordance with the laws of the State of Colorado, without regard to conflicts of laws. Should the parties fail to reach settlement in any such dispute, claim or point of validity both agree to comply with equitable binding arbitration, both parties to approve the appointment of the Arbiter.
Both parties agree that there are certain critical values represented herein, one to the other and that Joshua Haupt and Brett Roper shall handle any and all day to day elements related to the agreements requisites and management and that such elements when needed, in their sole opinion shall be documented via email one to the other with a return email of agreeance by the other.
IT IS CRITICAL that both parties hereby reaffirm their determination to work together to fulfill the terms and conditions stipulated to in the Term Sheet as executed on or about August 12, 2016 and that by affixing their signatures to this agreement do hereby reaffirm their commitment to working together to complete that process.
Agreed to this date, October 18, 2016.
Signatures to be affixed below:
/s/ Joshua Haupt
Mr. Joshua Haupt, a resident of Colorado
Legal Representative of “Pono” and “SNI” Interests
/s/ Brett Roper
Mr. Brett Roper, a resident of Colorado
Legal Representative of of “MMT”
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