|6 Months Ended|
Jun. 30, 2021
|Subsequent Events [Abstract]|
NOTE 20 – SUBSEQUENT EVENTS
Metropolis Property Purchase
In July 2021, the Company purchased the land and building in which it operates its cannabis dispensary in Metropolis, IL. The purchase price consisted of shares of the Company’s common stock, which was valued at $705,000 on the date of the transaction, and payoff of the seller’s remaining mortgage of approximately $1.6 million. In connection with this purchase, the Company entered into another mortgage agreement with DuQuoin State Bank in the amount of $2.7 million that matures in July 2041 and initially bears interest at a rate of 6.25% per annum, and adjusted each year based on a certain interest rate index plus a margin.
As part of this transaction, the seller was provided with a 30% ownership interest in Mari Holdings Metropolis LLC (“Metro”), the Company’s subsidiary that will own the property and related mortgage obligation, reducing the Company’s ownership interest in Metro to 70%.
Effective July 1, 2021, the Company entered into employment agreements with its CEO, CFO, and COO, expiring in June 2024, that provide an annual base salary of $350,000, $325,000, and $300,000, respectively, and the ability to receive annual bonuses of up to 75% of the executive’s annual base salary for each year during the term, based on reaching certain performance goals established by the Company.
The agreements also provide the CEO, CFO, and COO with a grant of non-qualified stock options to purchase up to (i) , , and shares, respectively, of the Company’s common stock, exercisable at the fair market value of the Company’s common stock on the date of the agreements, which fully vest over and expire in , (ii) , , and shares, respectively, of the Company’s common stock, exercisable at the fair market value of the Company’s common stock on the date that the Company’s stockholders approve an amendment to the Company’s Amended and Restated 2018 Stock Award and Incentive Plan, which fully vest over one year and expire five years from grant date; and (iii) additional grants on each anniversary of the effective date of the agreements in the sole discretion of the Company’s Compensation Committee.
The agreements include covenants not to compete, non-solicitation provisions, and termination obligations, among other terms and conditions.
Promissory Note Conversions
In August 2021, the Noteholder of the $3.2M Note converted approximately $387,000 of principal in the aggregate into shares of the Company’s common stock. Such conversions were effected in accordance with the terms of the note agreement, and therefore the Company was not required to record a gain or loss upon the conversions.
In July 2021, the Company granted (i) options to purchase up to an aggregate of shares of the Company’s common stock to the Company’s CEO, CFO, and COO pursuant to the aforementioned employment agreements at an exercise price of $0.88 per share (ii) -year options to purchase up to shares of common stock to each of the Company’s three independent board members at an exercise price of $per share, (ii) five-year options to purchase up to an aggregate of shares of common stock to employees at exercise prices of $and $per share, and (ii) an aggregate of shares of restricted common stock to employees that fully vest in two and three years.
Also during this period, (i) options to purchase shares of common stock were exercised at exercise prices of $ and $per share, (ii) shares of common stock were returned to the Company from the adjustment of a previously converted debenture, (iii) the Company issued shares of common stock pursuant to the aforementioned purchase of property in Metropolis, IL, and (iv) the Company issued shares of common stock for the payment of services to a consultant .
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