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): December 21, 2017 (December 15, 2017)
GENERAL CANNABIS CORP
(Exact Name of Registrant as Specified in Charter)
Colorado | 000-54457 | 20-8096131 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
6565 E. Evans Avenue |
| 80224 |
(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (303) 759-1300
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K 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
[_]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
[_]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
[_]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
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 ¨
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. ¨
Item 1.01
Entry into a Material Definitive Agreement
Closing of Offering
On December 15, 2017, General Cannabis Corp (the “Company”) entered into an amendment (the “Amendment”) to the Securities Purchase Agreement dated as of October 9, 2017 (the “Original Securities Purchase Agreement”) between the Company and certain accredited investors of the Company, in order to increase the maximum offering size from $3,000,000 to $4,000,000 (the Original Securities Purchase Agreement, as amended by the Amendment, is referred to herein as the “Purchase Agreement”). On December 15, 2017, the Company issued and sold an additional 3,250,000 units pursuant to the Purchase Agreement to certain non-affiliated accredited investors, and the Company received consideration of $3,025,000 in cash and extinguished $225,000 of outstanding indebtedness. The units were sold on the same terms as the Original Purchase Agreement, with each unit having a per share unit price of $1.00 and consisting of one share of Common Stock of the Company and a warrant to purchase one share of Common Stock of the Company at an exercise price of $0.50 per share (the “Warrants”). Each Warrant is exercisable for a period of two (2) years from the date of closing. Combined with the closing that occurred on October 9, 2017, the Company issued and sold an aggregate of 4,000,000 units, and received consideration of $3,750,000 in cash and extinguished $250,000 of outstanding indebtedness.
The units were offered and sold in a private placement without registration under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of certain states, in reliance on the exemptions provided by Rule 506 of Regulation D (“Regulation D”) promulgated under the Securities Act and in reliance on similar exemptions under applicable state laws. Each Purchaser is an “accredited investor” as such term is defined under the Securities Act and that such Purchaser acquired the securities for its own account and not with a view to resale or distribution in violation of the Securities Act.
The foregoing descriptions of the Amendment, the Purchase Agreement and the Warrants do not purport to be a complete and are qualified in their entirety by reference to the Form of the Securities Purchase Agreement and Form of Warrant, which are filed as Exhibit 10.1 and 10.2, respectively, to our October 13, 2017 Current Report on Form 8-K and are incorporated herein by reference, and to the Amendment, which is filed as Exhibit 10.3 hereto and is incorporated herein by reference.
Sale of Property
On December 19, 2017, the Company and RDR Realty, LLC, a non-affiliated entity (“Buyer”), entered into a Commercial Real Estate Agreement (the “Pueblo Agreement”), pursuant to which the Company agreed to sell to Buyer the Company’s Pueblo West Property (“Property”) for consideration of $625,000 in cash, including $25,000 of earnest money placed in escrow. The Property consists of three acres of land, which includes a 5,000 square-foot building and parking lot (“Property”). The closing date of the Agreement is December 29, 2017. If Buyer is unable to close on December 29, 2017, Buyer has the right to extend the close of escrow to January 15, 2018, by depositing an additional $37,500 into escrow. The entire $62,500 of earnest money will not be refundable to Buyer and will be applied to the purchase price when closing occurs. There can be no assurance as when the closing will occur, if at all.
Item 2.01
Disposition of assets.
The information regarding the Pueblo Agreement set forth in response to Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
Item 2.02
Results of Operations and Financial Condition
On December 18, 2017, the Company issued a press release relating to its closing of the private placement on December 15, 2017. The full text of the press release is furnished herewith as Exhibit 99.1.
On December 19, 2017, the Company issued a press release relating to entering into an agreement to sell the Property. The full text of the press release is furnished herewith as Exhibit 99.2.
The information in this Item 2.02 of this Current Report on Form 8-K and the related Exhibit 99.1 and Exhibit 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 3.02
Unregistered Sale of Equity Securities
The information regarding the Purchase Agreement set forth in response to Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
Item 9.01 |
| Financial Statements and Exhibits |
(d) Exhibits
The exhibit listed in the following Exhibit Index is filed as part of this Current Report on Form 8-K.
Exhibit No. |
Description | |
10.1 |
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Form 8-K filed by General Cannabis Corp. on October 13, 2017). | |
10.2 |
Form of Warrant (incorporated by reference to Exhibit 10.2 of the Form 8-K filed by General Cannabis Corp. on October 13, 2017). | |
10.3 |
Amendment No. 1 to Securities Purchase Agreement dated as of December 15, 2017, by and among the Company and the investors on the signature pages thereto. | |
99.1 |
Press release dated December 18, 2017 | |
99.2 |
Press release dated December 19, 2017 |
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 thereunto duly authorized.
Dated: December 21, 2017
| GENERAL CANNABIS CORP | |
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| By: | /s/ Robert L. Frichtel |
| Name: | Robert L. Frichtel |
| Title: | Chief Executive Officer |
EXHIBIT INDEX
Exhibit No. |
Description | |
10.1 |
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Form 8-K filed by General Cannabis Corp. on October 13, 2017). | |
10.2 |
Form of Warrant (incorporated by reference to Exhibit 10.2 of the Form 8-K filed by General Cannabis Corp. on October 13, 2017). | |
10.3 |
Amendment No. 1 to Securities Purchase Agreement dated as of December 15, 2017, by and among the Company and the investors on the signature pages thereto. | |
99.1 |
Press release dated December 18, 2017 | |
99.2 |
Press release dated December 19, 2017 |
Exhibit 10.3
AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT
This Amendment No. 1 to the Securities Purchase Agreement (this “Amendment”) is entered into as of December 15, 2017, by and between General Cannabis Corp., a Colorado corporation (the “Company”), and the purchasers listed on the signature pages hereto. This Amendment amends the Securities Purchase Agreement dated as of October 9, 2017 by and between the Company and the purchasers listed on Schedule A thereto (the “Agreement”).
R E C I T A L S
WHEREAS, Section 8(g)(i) of the Agreement provides that the Agreement may be amended with the written consent of the Company and the holders of at least a majority of the Common Stock purchased thereunder; and
WHEREAS, the Company and the holders of at least a majority of the Common Stock purchased under the Agreement as of the date hereof wish to amend the Agreement in order to increase the maximize size of the offering pursuant to the Agreement from $3,000,000 to $4,000,000.
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Company and the purchasers on the signature page here, constituting a majority of the Common Stock purchased under the Agreement as of the date hereof, hereby agree to amend the Agreement as follows:
A M E N D M E N T
1.
Definitions. Except as otherwise provided herein, capitalized terms used in this Amendment will have the definitions set forth in the Agreement.
2.
Amendment of Recitals. The last sentence of the recitals in the Agreement is hereby amended to change “3,000,000 Units” to “4,000,000 Units” as follows:
“The Company is proposing to issue and sell (the “Offering”) up to 4,000,000 Units (as defined below).”
3.
Amendment to Section 2 (Closing; Delivery). Section 2 of the Agreement is hereby amended by deleting the first sentence of 2(a)(ii) and replacing it with the following sentence in order to increase the size of the Offering from $3,000,000 to $4,000,000:
“Until such time as the aggregate proceeds from the Offering equal a total of four million dollars ($4,000,000), the Company may sell additional Units to such persons or entities as determined by the Company, or to any Purchaser who desires to acquire additional Units.”
4.
Terms of Agreement; Conflicting Terms. Except as expressly modified hereby, all terms, conditions and provisions of the Agreement shall continue in full force and effect. In the event of any inconsistency or conflict between the Agreement and this Amendment, the terms, conditions and provisions of this Amendment shall govern and control.
5.
Governing Law. This Amendment is to be construed in accordance with and governed by the laws of Colorado, without reference to principles of choice of law.
6.
Counterparts; Entire Agreement. This Amendment may be executed in counterparts, each of which shall be enforceable against the party actually executing such counterpart, and which taken together shall constitute one and the same instrument. This Amendment and the Agreement constitute the entire and exclusive agreement between the parties with respect to this subject matter and supersedes all previous discussions and agreements with respect to the subject matter herein.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized representatives, effective as of the date first written above.
GENERAL CANNABIS, CORP. | |
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By: |
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Name: |
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Title: |
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SIGNATURE PAGE TO AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized representatives, effective as of the date first written above.
PURCHASER
Name of Purchaser: | |
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By: |
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Name: |
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Title: |
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SIGNATURE PAGE TO AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT
Exhibit 99.1
GENERAL CANNABIS CLOSES $4 MILLION PRIVATE PLACEMENT
DENVER, Dec. 18, 2017 -- General Cannabis Corporation (OTCQB: CANN) today announced that it has closed the previously announced private placement of its common stock and warrants to purchase its common stock. The private placement was increased to a total of $4 million. The financing consisted of units sold at a price of $1.00 per unit, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of 50 cents per share and exercisable immediately.
In total, the Company issued an aggregate of 4 million shares of common stock and warrants to purchase up to 4 million shares of common stock.
“Closing the financing gives the Company the capital to aggressively expand our business into new markets.” said General Cannabis CEO Robert Frichtel commenting on the capital raise. “We are very excited to have greater capacity to accelerate the development of our business.”
Michael Feinsod, General Cannabis Chairman, commented on the opportunities that the additional capital provides: “General Cannabis continually seeks to expand into new cannabis-related businesses through acquisitions and investment. This additional capital will allow the company to increase these efforts and bring new and innovative products to the regulated cannabis market.”
Neither the shares of General Cannabis common stock nor the warrants sold in the private placement have been registered under the Securities Act of 1933, as amended (the “Securities Act"). Accordingly, these securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act. General Cannabis has agreed to file certain registration statements covering the resale of the General Cannabis common stock sold in the private placement as well as the General Cannabis common stock issuable upon exercise of the warrants. This press release shall not constitute an offer to sell or the solicitation of an offer to buy General Cannabis common stock or warrants to purchase General Cannabis common stock.
About General Cannabis Corp.
General Cannabis Corp. is the comprehensive national resource for the highest-quality service providers available to the regulated cannabis industry. We are a trusted partner to the cultivation, production and retail sides of the cannabis business. We do this through a combination of strong operating divisions such as security, marketing, operational consulting and products, real estate and financing. As a synergistic holding company, our divisions are able to leverage the strengths of each other, as well as a larger balance sheet, to succeed. Our website address is www.generalcann.com.
Forward-looking Statements
This presentation contains forward-looking statements that relate to future events or General Cannabis’ future performance or financial condition. Such statements include without limitation statements regarding the closing of the financing giving the Company the capital to aggressively expand our business into new markets and accelerate the development of our business; statements the opportunities that the additional capital provides; statements regarding General Cannabis continually seeking to expand into new cannabis-related businesses through acquisitions and investment; and statements that this additional capital will allow the company to increase these efforts and bring new and innovative products to the regulated cannabis market. Any statements that are not statements of historical fact, such as the statements above and including statements containing the words “plans,” “anticipates,” “expects” and similar expressions, should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as result of a number of factors, including those described from time to time in General Cannabis’ filings with the Securities and Exchange Commission. General Cannabis undertakes no duty to update any forward-looking statements made herein.
Contact
Robert Frichtel
CEO, General Cannabis Corp
(303) 759-1300
Exhibit 99.2
GENERAL CANNABIS CORPORATION ANNOUNCES AGREEMENT TO SELL REAL ESTATE INVESTMENT
DENVER, Colorado- Dec. 19, 2017—General Cannabis Corporation (OTCQB: CANN) today announced that it has entered into an agreement to sell its real estate investment in Pueblo, Colorado. On December 18, 2017, General Cannabis Corp and RDR Realty, LLC, a non-affiliated entity (“RDR”), entered into an agreement pursuant to which General Cannabis agreed to sell to RDR the General Cannabis’ Pueblo West Property (“Property”) for gross consideration of $625,000 in cash. The Property consists of three acres of land, which includes a 5,000 square-foot building and parking lot. The closing date of the Agreement is December 29, 2017.
There are certain conditions to closing the sale. If RDR is unable to close on December 29, 2017, RDR has the right to extend the close of escrow to January 15, 2018, by depositing an additional $37,500 into escrow. The entire $62,500 of earnest money will not be refundable to RDR and will be applied to the purchase price when closing occurs.
The sale is in keeping with General Cannabis’ long-term strategy of investing for total return in order to continue delivering superior long-term value creation to shareholders.
About General Cannabis Corp.
General Cannabis Corp. is the comprehensive national resource for the highest-quality service providers available to the regulated cannabis industry. We are a trusted partner to the cultivation, production and retail sides of the cannabis business. We do this through a combination of strong operating divisions such as security, marketing, operational consulting and products, real estate and financing. As a synergistic holding company, our divisions are able to leverage the strengths of each other, as well as a larger balance sheet, to succeed. Our website address is www.generalcann.com.
Forward-looking Statements
This presentation contains forward-looking statements that relate to future events or General Cannabis' future performance or financial condition. Such statements include without limitation statements regarding the anticipated closing date of the sale of the Property and statements regarding General Cannabis’ long-term strategy. Any statements that are not statements of historical fact, such as the statements above and including statements containing the words "plans," "anticipates," "expects" and similar expressions, should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as result of a number of factors, including that the conditions to closing the sale may not occur or the sale may not otherwise occur, and including those described from time to time in General Cannabis' filings with the Securities and Exchange Commission. General Cannabis undertakes no duty to update any forward-looking statements made herein.
Contact
Robert Frichtel
CEO, General Cannabis Corp
(303) 759-1300