CLS HOLDINGS USA, INC. (OTCMKTS:CLSH) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement.
On December 4, 2017, CLS Holdings USA, Inc. (the “Company,” “CLS” or “we”) and Alternative Solutions, LLC (“Alternative Solutions”) entered into a Membership Interest Purchase Agreement (the “Acquisition Agreement”) for CLS to acquire (the “Oasis Acquisition”) the outstanding equity interests in three subsidiaries of Alternative Solutions (collectively, the “Oasis LLCs”). to the Acquisition Agreement, CLS paid a non-refundable deposit of $250,000 upon signing, which was to be followed by an additional payment of $1,800,000 within 45 days (75 days if an extension fee of $200,000 is paid by CLS) for an initial 10% of each of the Oasis LLCs.
On January 16, 2018, CLS and Alternative Solutions entered into a First Amendment to the Membership Interest Purchase Agreement (the “First Amendment”) and extended the date upon which the $1,800,000 is to be paid to January 29, 2018 at 5:00 p.m. PST.
On January 25, 2018, CLS and Alternative Solutions entered into a Second Amendment to the Membership Interest Purchase Agreement (the “Second Amendment”) and further extended the date upon which the $1,800,000 is to be paid to February 5, 2018 at 5:00 p.m. PST.
On April 2, 2018, CLS and Alternative Solutions entered into a Third Amendment to the Membership Interest Purchase Agreement (the “Third Amendment”) and extended the date upon which CLS is to pay the “Oasis Note” by approximately one (1) year to December 31, 2019 at 5:00 p.m. PST. The Third Amendment also provides that the time period to determine average daily net revenue for the “Bonus Purchase Price”, is amended to be the calendar year ending December 31, 2019 with the payment due thereunder extended to May 30, 2020 at 5:00 p.m. PST.
On April 2, 2018, CLS and Alternative Solutions also entered into a Fourth Amendment to the Membership Interest Purchase Agreement (the “Fourth Amendment”) and extended the date upon which CLS is to pay the “Closing Consideration,” to May 21, 2018 at 5:00 p.m. PST.
The Closing Consideration that we must pay to acquire the remaining 90% of the Oasis LLCs, is equal to cash in the amount of $6,200,000, a $4.0 million promissory note due in December 2019 (the “Oasis Note”), and $6,000,000 in shares (the “Purchase Price Shares”) of our common stock (collectively, the “Closing Consideration”).
The number of Purchase Price Shares shall equal $6,000,000 divided by the lower of $1.00 or the conversion price to receive one share of our common stock in our next equity offering that commences in 2018, multiplied by 80%. The Oasis Note will be secured by a first priority security interest over the assets of each of the Oasis LLCs and Alternative Solutions, including our 10% equity interest in the Oasis LLCs, and CLS shall deliver to Alternative Solutions a confession of judgment that will become effective in the event of any event of default under the Oasis Note.
Oasis currently owes certain amounts to a consultant known as 4Front Advisors, LLC. If we make any payments to this company post-closing, generally speaking, we will be entitled to deduct the present value of such payments from the principal amount due under the Oasis Note.
Assuming we close on the Acquisition Agreement, in May 2020, Alternative Solutions will be entitled to a $1,000,000 payment from us (the “Bonus Purchase Price”) if the existing dispensary operated by an Oasis LLC has maintained an average revenue of $20,000 per day during the 2019 calendar year.
The sale, assignment, transfer, pledge or other disposition of any interest in the Oasis LLCs or Alternative Solutions is ineffective unless approved in advance by the state of Nevada and any municipality in which the Oasis LLC’s operation is licensed.
In connection with the Oasis Acquisition, we plan to employ Mr. Ben Sillitoe as our COO. We plan to issue him 500,000 shares of restricted common stock to his proposed employment agreement. Upon our payment of the additional deposit of $1,800,000, we will also issue 500,000 shares of our restricted common stock to each of David Lamadrid, our President and Chief Financial Officer, and J.P. Barton, for introducing us to Alternative Solutions.
The closing of the Acquisition Agreement is subject to a number of conditions, including our ability to raise the $8,000,000 in cash required to close the transaction. As a result, there can be no assurance that we will be able to close the Oasis Acquisition.
The foregoing is a summary of the material terms of the Acquisition Agreement, as modified by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment and is subject to the terms of the full Acquisition Agreement, which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on December 7, 2018, the First Amendment, which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 19, 2018, the Second Amendment, which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 26, 2018, and to the Third Amendment and the Fourth Amendment, which are attached as Exhibit 2.1 and Exhibit 2.2, respectively, to this Current Report on Form 8-K. The exhibits to the Acquisition Agreement will be filed upon request of the Securities and Exchange Commission.
Item 9.01Financial Statements and Exhibits.
CLS Holdings USA, Inc. ExhibitEX-2.1 2 ex2-1.htm EX-2.1 Exhibit 2.1 THIRD AMENDMENT TO THE MEMBERSHIP INTEREST PURCHASE AGREEMENT BY AND BETWEEN CLS HOLDINGS USA INC. AND ALTERNATIVE SOLUTIONS L.L.C. This Third Amendment to the Membership Interest Purchase Agreement (this “Amendment”) is made and entered into effective as of 27th day of March 2018,…To view the full exhibit click here
About CLS HOLDINGS USA, INC. (OTCMKTS:CLSH)
CLS Holdings USA, Inc., is engaged in developing a method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into concentrates. The Company’s concentrates include oils, waxes, edibles and shatter. These concentrates may be ingested in various ways, including through vaporization through electronic cigarettes (e-cigarettes), and used for a range of pharmaceutical and other purposes. The Company intends to monetize extraction method through the licensing of its methods and processes to others, as in the Colorado Arrangement; the processing of cannabis for others, and the purchase of cannabis and the processing and sale of cannabis-related products. The Company’s products and services include Licensing Operations, Processing Revenue, Processing Facilities and Sale of Products and Brand Creation. As of May 31, 2016, the Company had not generated any revenues.