Medicine Man Technologies, Inc. (OTCMKTS:MDCL) Files An 8-K Entry into a Material Definitive Agreement

Medicine Man Technologies, Inc. (OTCMKTS:MDCL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.

Private Placement of Preferred Stock and a Note

On December 16, 2020, Medicine Man Technologies, Inc. (the “Company”) entered into an Amendment to Securities Purchase Agreement with Dye Capital Cann Holdings II, LLC (the “Investor”) to change the number of shares of the Company’s Series A preferred stock, par value $0.001 per share (the “Preferred Stock”) the Investor would purchase under the Securities Purchase Agreement, dated November 16, 2020 (as amended, the “SPA”), between the Company and the Investor from 12,400 to up to 13,000 in one or more closings, among other changes. The Company also executed a letter agreement with the Investor providing the rights described below (the “Letter Agreement”).

The Company issued and sold to the Investor 7,700 shares of Preferred Stock on the same date, 1,450 shares of Preferred Stock on December 18, 2020, and 1300 shares of Preferred Stock on December 22, 2020. The purchase price was $1,000 per share of Preferred Stock, for aggregate gross proceeds of $10,450,000 and aggregate net proceeds of approximately $ 8,205,500 after deducting placement agent fees and estimated offering expenses.

In addition, on December 16, 2020, the Company entered into a Secured Convertible Note Purchase Agreement (the “NPA”) with Dye Capital & Company, LLC (“Dye Capital”) and issued and sold to Dye Capital a Convertible Note and Security Agreement in the principal amount of $5,000,000 (the “Note”).

Also on December 16, 2020, the Company entered into a Consent, Waiver and Amendment with Dye Capital Cann Holdings, LLC (“Dye Cann I”), in order to waive certain participation rights in the offerings and amend the Securities Purchase Agreement between the Company and Dye Cann I, dated June 5, 2019, as amended (the “Dye Cann I SPA”), as described below (the “Waiver”).

The Benchmark Company, LLC, SDDco-Brokerage LLC, and DelMorgan Group, LLC, each acted as placement agent in connection with the transactions described above, and will each receive $31,500.00 as the Company’s placement agents.

Justin Dye, the Company’s Chief Executive Officer and the largest beneficial owner of the Company’s common stock, par value $0.001 per share (the “Common Stock”), controls the Investor, Dye Capital and Dye Cann I and has sole voting and dispositive power over the securities held by the Investor, Dye Capital and Dye Cann I. Mr. Dye, our Chief Operating Offering, Nirup Krishnamurthy, and one of our directors, Jeffrey Garwood, are part owners of the Investor and Dye Cann I. Mr. Krishnamurthy and Mr. Garwood do not beneficially own any of the securities held by the Investor or Dye Cann I. The Company’s Board of Directors formed a special committee consisting of one independent director to review, evaluate, negotiate, approve and recommend to the full Board of Directors (if deemed appropriate), the issuance of shares of Preferred Stock in the transactions described under Item 1.01 and Item 2.01 of this Current Report on Form 8-K. In addition, the special committee obtained an opinion delivered by a financial advisory firm to the special committee, which concluded that, based upon and subject to the procedures followed, limitations on the review undertaken and assumptions made and qualifications and other matters contained in opinion, the consideration to be received for the issuance of the Preferred Stock was fair to the Company from a financial point of view.

Terms of the Preferred Stock

On December 16, 2020 and effective as of such date, the Company filed a Certificate of Designation of Series A Cumulative Convertible Preferred Stock (the “Certificate of Designation”) with the Nevada Secretary of State to create and authorize up to 60,000 shares of Preferred Stock to authority granted to the Company’s Board of Directors under the Company’s articles of incorporation. The table below summarizes the principal terms of the Preferred Stock.

Terms of the Note

The table below summarizes the principal terms of the Note.

A copy of the Note is attached here to as Exhibit [4.1] and incorporated herein by reference.

Additional Terms of the NPA

The Company is required to reimburse Dye Capital for its out-of-pocket expenses in connection with the NPA and the Note. The NPA also contains customary representations, warranties, covenants, including indemnifications, and closing conditions.

A copy of the NPA is attached here to as Exhibit 10.4 and incorporated herein by reference.

Forward-Looking Statements and Limitation on Representations

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans, and objectives for future operations, are forward-looking statements. Forward-looking statements are based upon our current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements in this report are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether because of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

The representations and warranties of the Company contained in the SPA and the NPA have been made solely for the benefit of the parties thereto. In addition, such representations and warranties (i) have been made only for purposes of the SPA and the NPA, (ii) in some cases, have been qualified by documents filed with, or furnished to, the SEC by the Company before the date of the SPA and the NPA (and stockholders and investors should read the SPA and the NPA in the context of the Company’s other public disclosures in order to have a materially complete understanding of the disclosures therein), (iii) are subject to materiality qualifications contained therein which may differ from what may be viewed as material by stockholders and investors, (iv) were made only as of the date of the SPA and the NPA or such other date as is specified therein, as applicable, and (v) have been included in the SPA and the NPA for the purpose of allocating risk between the contracting parties rather than establishing matters as facts.

The SPA, the NPA, the summary of the SPA and the NPA and the other disclosures included in this Current Report on Form 8-K are intended to provide stockholders and investors with information regarding the terms of the SPA, the NPA and the other transaction documents described herein, and not to provide stockholders and investors with any other factual information regarding the Company or its subsidiaries or their respective business. You should not rely on the representations and warranties in the SPA or the NPA or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the SPA or the NPA, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Other than as disclosed in this Current Report on Form 8-K, as of the date of this Current Report on Form 8-K, the Company is not aware of any material facts that are required to be disclosed under the federal securities laws that would contradict the representations and warranties in the SPA or the NPA. The Company will provide additional disclosure in its public reports to the extent that it is aware of the existence of any material facts that are required to be disclosed under federal securities laws and that might otherwise contradict the representations and warranties contained in the SPA and the NPA and will update such disclosure as required by federal securities laws. Accordingly, the SPA and the NPA should not be read alone, but should instead be read in conjunction with the other information regarding the Company and its subsidiaries that has been, is or will be contained in, or incorporated by reference into, the Forms 10-K, Forms 10-Q, Forms 8-K, proxy statements, registration statements and other documents that the Company files with the SEC.

Terms of the Waiver

Under the Waiver, Dye Cann I waived its rights under the Dye Cann I SPA to participate in the offerings of Preferred Stock and the Note and certain other rights to permit the offerings of the Preferred Stock and the Note. In addition, as consideration for entering into the Waiver, the Waiver amended Dye Cann I’s existing right under the Dye Cann I SPA to appoint two individuals designated to the Board such that until the later of (i) two years from the last closing under the Dye Cann I SPA, or (ii) the date Dye Cann II no longer owns, in the aggregate, at least $10,000,000 of Common Stock, as measured by a trailing 30 day volume weighted average price of the Common Stock, or continues to hold at least 8,333,333 shares of Common Stock, the Company is required to take all actions to ensure that two individuals designated by Dye Cann I shall be appointed to the Company’s Board of Directors.

A copy of the Waiver is attached here to as Exhibit 10.5 and incorporated herein by reference.

2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information included in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.

Item 3.02. Unregistered Sales of Equity Securities.

The information included in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 3.02.

The issuance of the shares of Preferred Stock to the Investor and the Note to Dye Capital was exempt from registration under Securities Act Section 4(a)(2) and Securities Act Rule 506(b). The Investor and Dye Capital are sophisticated and represented in writing that they were accredited investors and acquired the securities for their own accounts for investment purposes. A legend will be placed on the certificates representing shares of Preferred Stock and on the Note, subject to the terms of the applicable transaction documents, stating that the securities in question have not been registered under the Securities Act and cannot be sold or otherwise transferred without registration or an exemption therefrom.

Item 3.03. Material Modification to Rights of Security Holders.

The information included in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 3.03.

5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information included in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 5.03.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits


Medicine Man Technologies, Inc. Exhibit
EX-3.1 2 medman_ex0301.htm CLOSING CERTIFICATE Exhibit 3.1   MEDICINE MAN TECHNOLOGIES,…
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About Medicine Man Technologies, Inc. (OTCMKTS:MDCL)

Medicine Man Technologies, Inc. is a cannabis consulting company. The Company provides consulting services for cannabis growing technologies and methodologies, as well as retail operations of cannabis products. The Company focuses on providing assistance to its clients in various businesses related to the cannabis industry, including cultivation; the dispensary business model, including combinations and other variables related to the retail model configuration of both a medical, as well as adult use (recreational) operation, and other areas, including but not limited to business plan generation, financial pro forma generation, application generation support, recommendations for other service providers, employee training and facility design services. It offers a separate cultivation or dispensary license and other related consultative services. It offers both pre-license consulting, as well as licensure services that generally tie to the size of the proposed business venture.

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