|12 Months Ended|
Dec. 31, 2020
|Subsequent Events [Abstract]|
NOTE 22 – SUBSEQUENT EVENTS
In March 2021, the Company entered into a securities purchase agreement with Hadron Healthcare Master Fund (“Hadron”) with respect to a financing facility of up to $ million in exchange for newly-designated Series C convertible preferred stock of the Company and warrants to purchase the Company’s common stock.
At the closing of the transaction in March 2021, Hadron purchased $23.0 million of Units at a price of $ per Unit. Each Unit is comprised of one share of Series C preferred stock and a -year warrant to purchase two and one-half shares of common stock. Accordingly, the Company issued to Hadron shares of Series C preferred stock and warrants to purchase up to an aggregate of 15,540,540 shares of common stock. Each share of Series C preferred stock is convertible, at Hadron’s option, into five shares of common stock, and each warrant is exercisable at an exercise price of $1.087 per share. The warrants shall be subject to early termination if certain milestones are attained and the market value of the Company’s common stock reaches certain predetermined levels.
In connection with the closing of the transaction, the Company filed a certificate of designation with respect to the rights and preferences of the Series C convertible preferred stock. Such stock is zero coupon, non-voting. and has a liquidation preference equal to its investment amount plus declared but unpaid dividends. Holders of Series C convertible preferred stock are entitled to receive dividends on an as-converted basis.
Of the $23.0 million of proceeds received by the Company in March 2021, approximately (i) $7.8 will fund construction and upgrades of certain of the Company’s owned and managed facilities, and (ii) $15.2 million was used to pay down debt and obligations, comprised of the $4.4M Notes, the $1M Note, the New $3M Note, the $5.8M Note, the Existing Notes, a portion of the Third Party Notes (all referred to in Note 11 – Debt), and a portion of the Due To Related Parties balance discussed in Note 20 – Related Party Transactions.
The balance of the committed facility of up to an additional $23.0 million is intended to fund the Company’s specific targeted acquisitions provided such acquisitions are contracted in 2021 and consummated, including obtaining the necessary regulatory approvals, no later than the end of 2022. Such funds shall be provided by Hadron on the same aforementioned terms as the initial proceeds.
Provided that as at least 50% of the shares of Series C convertible preferred stock remain outstanding, the holders shall have the right to appoint one observer to the Company’s board and to each of its board committees, and appoint a member to the Company’s board if and when a seat becomes available, at which time the observer roles shall terminate.
The transaction imposes certain covenants on the Company with respect to the incurrence of new indebtedness, the issuance of additional shares of any designation of preferred stock, and the payment of distributions.
In February 2021, the Company entered into a five-year lease agreement for a 12,000 square foot premises located in Wilmington, DE which the Company intends to develop into a cannabis production facility with offices, and sublease to its cannabis-licensed client in this state. The lease contains an option to negotiate an extension at the end of the lease term.
In January 2021, the Company and MRSVP entered into an agreement whereby the Company assigned and transferred membership interests comprising an 11% ownership in MRSVP in exchange for a release from all further obligation by the Company to make future investments or payments and certain other non-monetary consideration. Following the interest transfer, the Company’s ownership interest in MRSVP was reduced to 12% on a fully diluted basis.
Conversion of Debentures Payable
In January 2021, the holder of the $21M Debentures converted $1,300,000 of principal and approximately $56,000 of accrued interest into shares of the Company’s common stock at a conversion price of $0.29 per share. After this conversion, the entire $21M Debentures were retired and no amounts remain outstanding.
In the first quarter of 2021, the Company granted to purchase up to shares of common stock at exercise prices ranging from $to $per share. The aggregate fair value of these options of approximately $372,000 will be amortized to compensation expense over the respective vesting periods. Also during this period, (i) a warrant to purchase 50,000 shares of common stock at $0.15 per share was exercised, (ii) a warrant to purchase up to 200,000 shares of common stock at $1.75 per share was forfeited, (iii) a three-year warrant to purchase up to 100,000 shares of common stock at $0.82 was issued, and (iv) shares of common stock were issued to settle an outstanding obligation.
Revised Note Receivable
In March 2021, the Company was issued a revised promissory note from Healer in the principal amount of approximately $894,000 representing the previous loans of $800,000 extended to Healer by the Company plus accrued interest through the revised promissory note issuance date. The revised promissory note bears interest at a rate of 6% per annum and requires quarterly payments of interest from April 2021 through the maturity date in April 2016. Additionally, the Company has the right to offset any licensing fees owed to Healer by the Company in the event Healer fails to make any timely payment. In March 2021, the Company offset approximately $28,000 of licensing fees payable to Healer against the principal balance of the revised promissory note, reducing the principal amount to approximately $866,000.
Common Stock Issuance Obligations
In February 2021, the Company issued shares of common stock in connection with the stock grant to a current employee previously disclosed in Note 14 – Stockholders’ Equity.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef