8-K
CANNAPHARMARX, INC. (CPMD)
U.S. 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):
January 22, 2021
Cannapharmarx, Inc.
(Exact name of small business issuer as specified in its charter)
| Delaware | 000-27055 | 24-4635140 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer ID No.) |
3600
888-3rd Street SW
Calgary, Alberta, Canada T2P5C5
(Address of Principal Executive Offices)
(949) 652-6838
(Issuer’s Telephone Number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Not Applicable | Not Applicable | Not Applicable |
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 12b2 of the Securities Exchange Act of 1934 (§240.12b2 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 |
|---|
On December 23, 2020, CannapharmaRx, Inc. (the “Company”) received a commitment letter from Global Capital Partners Fund, LLC (the “Commitment”) for a certain property in Alberta, Canada. The Company returned the Global Capital Partners Fund, LLC commitment letter on or before the expiration date of the Commitment, as extended. The transaction, subject to certain closing conditions, is scheduled to close in February 2021 in conjunction with the purchase of the Alberta, Canada facility as discussed in the Form 8-K filed on January 12, 2021, the substance of which is incorporated by reference herein.
Pursuant to the Commitment, the amount of the proposed loan is Twelve Million dollars in United States currency (US$12,000,000) with interest being paid monthly and no original issue discount. The Commitment charges interest at an amount up to, but not to exceed thirteen (13%) per annum, fixed for twelve (12) months and thirteen and one-half percent (13.5%) for the second year of the proposed loan. The exact interest rate will be determined three business dates prior to closing. The Company will pay two and one-half percent (2.5%) of the loan as points on the loan to Global Capital Partners Fund, LLC (the “Points”). The points are payable as follows: Ten Thousand US Dollars (USD$10,000) paid, which is deemed earned. One Hundred Twenty Thousand US Dollars (USD$120,000), due and payable upon issuance of the Commitment. This fee will be non-refundable. The balance, which equals One Hundred Seventy Thousand US Dollars ($170,000), is payable at closing. A finder’s fee of two and one-half percent (2.5%) is due to Teneo Capital at closing. The term of the loan will be twenty-four (24) months. Global Capital Partners Fund, LLC is not requiring personal guarantees of any of the principals of the Company. The proposed loan will carry with it a five percent (5%) prepayment penalty which is waived should the Company make three (3) months of timely payments. The Company will grant a first position lien on the financed property.
The Commitment is premised on several conditions. All payments to be made in US Currency. Global Capital Partners Fund, LLC must receive a Lender ordered MAI appraisal showing satisfactory value. Global Capital Partners Fund, LLC is granting a maximum loan to value of fifty-five percent (55%). Global Capital Partners Fund, LLC must receive a Title Report and legal opinion showing good title to the property. Global Capital Partners Fund, LLC must receive a satisfactory Legal opinion on all related documentation. The Company must obtain insurance protecting Global Capital Partners Fund LLC interest in the property.
The material terms of the Commitment are included in that certain commitment letter attached hereto and incorporated herein as if set forth as Exhibit 99.1.
| Item 7.01 | Regulation FD Disclosure |
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Attached is a copy of a press release being issued by the Company relating to the Commitment, a copy of which is attached as Exhibit 99.2 and is hereby incorporated.
| Item 9.01. | Financial Statements and Exhibits. |
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(d) Exhibits.
| Exhibit <br><br> Number | Description |
|---|---|
| 99.1 | Commitment Letter |
| 99.2 | Press Release titled CannapharmaRx, Inc. Announces Non-Dilutive Commitment Financing for Assets and Facilities Located in Cremona, AB, dated January 19, 2021 |
| 2 |
| --- |
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 hereunto duly authorized.
| Dated: January 22, 2021 | CANNAPHARMARX, INC. |
|---|---|
| By: /s/Dominic Colvin | |
| Chief Executive Officer |
| 3 |
| --- |
Exhibit 99.1
December 23, 2020
ncolvin@cannapharmarx.com
CannaPharmaRX Inc.
888-3^rd^ Street SW, Suite 3600
Calgary, Alberta, Canada T2P 5C5
Attention: Nick Colvin
Subject: First Mortgage Loan, 1 Plant TechnologyRd, Saskatoon, Saskatchewan Canada and PO Box 209 Cremona, Alberta Canada
Dear Mr. Colvin,
We are pleased to inform you that we will commit to referenced project to fund Twelve Million Dollars ($12,000,000). Based on the following terms and conditions.
TERMS & CONDITIONS:
| 1. | Gross Loan Amount: | $12,000,000 (USD). |
|---|---|---|
| 2. | Term: | 24 months. |
| 3. | Guarantors: | We will not require personal guarantees. |
| 4. | Repayment Amount: | $12,000,000 (interest paid monthly). |
| 5. | Prepayment Penalty: | 5%, none after 3 months of timely payments |
| 6. | Interest: | Up to, but not to exceed 13% per annum, fixed at closing for 12 months, 13.5% months 13 through 24. |
| 7. | Collateral: | First lien of the property known as: 1 Plant Technology Rd, Saskatoon, Saskatchewan Canada and PO Box 209 Cremona, Alberta Canada**.** |
555 Fifth Avenue, Suite 302,New York, NY 10017Phone: 212 658 1019 • e-mail jmalvasio@gcpfund.com
CannaPharmaRX Inc.December 23, 2020Page Two
| 8. | Points: | 2.5% of the gross moneys funded which equals $300,000. This fee is payable in the following<br> manner: $10,000 (USD) paid, which is deemed earned. $120,000 (USD), due and payable upon issuance of this agreement, this<br> fee in non-refundable. The balance, which equals $170,000 (USD), is payable at closing. In addition, 2.5% is due to Teneco<br> Capital at closing. |
|---|---|---|
| 9. | Loan Closing: | Closing will take place prior to 2-15-21 at the expiration of which lenders obligation under<br> this agreement shall become null and void unless extended in writing by Global Capital Partners Fund LLC. |
| Additional Stipulations: | a. All payments to be made in US Currency | |
| b. Receipt and review of Lender ordered MAI appraisal showing satisfactory value. | ||
| c. Receipt and review of Title Report and legal opinion on same. | ||
| d. Legal opinion on all related documentation | ||
| e. Appropriate Insurance protecting Global Capital Partners Fund LLC interest in the property | ||
| f. This document is subject to change, but may only be done so in writing, and approved<br> by all parties. | ||
| g. Closing to take place at Global Capital Partners Fund LLC’s place of business or<br> any other place designated by lender | ||
| h. Compliance of all requirements of the mortgage, investor conditions, secondary market<br> approval, and Government Agencies where applicable, Take out loan if applicable. | ||
| i, Your exact interest rate will be determined 3 business dates prior to closing | ||
| j. This agreement is partially based on the information provided by the proposed borrowers<br> or their representatives, should any of the information be untrue and /or misstatements we shall not be obligated to proceed,<br> and all moneys received will be deemed earned as partial liquidated damages. | ||
| k. Lender’s obligation hereunder shall in no event be assignable by you without our<br> prior written consent in each instance. | ||
| l. All closing cost and escrow including, but not limited to taxes, fires insurance, and<br> flood insurance (if required) will be deducted from proceeds of the mortgage. | ||
| m. New fire insurance policy in the amount of $ TBD with extended coverage and a paid bill<br> must be presented at closing. A binder will not be acceptable. The mortgage clause should read: Global Capital Partners Fund<br> LLC its successors and assigns. The above amount may be less. If applicable. | ||
| n. There is no material variation at the time of closing from the information set forth<br> in your application. You must execute your final typed application together with all necessary disclosures at closing. | ||
| o. Complete financial package on borrowers. | ||
| p. Maximum loan to value of 55%, |
CannaPharmaRX Inc.December 23, 2020Page Three
Borrower agrees that any claim for any reason against lender shall not be greater than any money received by lender. The parties agree that all agreements shall be governed and enforced in accordance with the laws of the State of New York. Should any dispute arise between the parties, all parties agree to arbitration by AAA in Nassau County State of New York and agree that this is the sole jurisdiction.
All work product remains the property of the lender.
Please sign this agreement and return to this office. As soon as we receive same, we will proceed. Borrower is responsible for payment of all third-party reports in advance.
If you have any questions, please contact me at the phone number listed below immediately. This agreement must be signed and returned no later than the close of business December 28, 2020.
| Sincerely, |
|---|
| /s/ Joe Malvasco |
| Joe Malvasto, President Gloval Capital Partners Fund LLC |
Agreed and accepted:
/s/ Dominic Colvin
Dominic Colvin
Presidentand CEO
CannaPharmaRX Inc.
cc: andriy.stepanyants@teneco.comJonathan.beland@teneco.com
Wire instructions:
Incoming Bank:
Signature Bank NA
261 Madison Ave.
New York NY 10016
Account Name:
Global Capital Partners Fund LLC
555 Fifth Avenue
Suite 302
New York NY 10017
Account Number: xxxxxxxxxx
Routing Number: xxxxxxxxx
555 Fifth Avenue, Suite 302, New York,NY 10017
Phone: 212 658 1019 • e-mail jmalvasio@gcpfund.com
Exhibit 99.2
CannapharmaRx, Inc. Announces Non-DilutiveCommitment Financing for Assets and Facilities Located in Cremona, AB
CALGARY, AB / ACCESSWIRE / January 19,2021 / CannapharmaRx, Inc. (OTC PINK:CPMD) a future leader in ultramodern, highly efficient cannabis production facilities in Canada announced today that it has secured a commitment letter for twelve million dollars ($12,000,000) for the recently announced purchase of the cannabis cultivation and production business located at, and operated out of Cremona, Alberta and other acquisitions of cannabis cultivation and production facilities.
The loan, which is fully collateralized by the facilities, will provide CannapharmaRx with the capital to complete the purchase of the 55,200 square foot facility, which is capable of producing 5,200 kilograms of cannabis biomass per year. As previously announced in the Form 8-K and Press Release released on January 12, 2021, the facility currently holds Health Canada licenses for cultivation and sales, as well as EU GMP Certification that CannapharmaRx will apply for upon the closing of this transaction.
“We are thrilled to have secured this non-dilutive commitment to purchase the Cremona facility, says, Nick Colvin, CEO of CannapharmaRx. Ensuring a healthy capital structure is paramount to any publicly traded company. To close arguably the most important transaction in the company’s history without the need to issue shares speaks volumes of the importance that this opportunity presents to our company, as well as Global Capital,” said Nick Colvin, CEO of CannapharmaRx. “We are very confident that the purchase of this facility will serve not only as a pivotal strategic opportunity for a pathway into Canada and European countries, but the asset itself will add incremental value to our Company,” added Colvin.
About CannapharmaRx, Inc.
CannapharmaRx is focused on the acquisition and development of state-of-the-art cannabis grow facilities located in Canada, and is currently in discussion with other companies regarding potential acquisitions. CannapharmaRx's business strategy is to become a leader in high quality and low-cost production of cannabis through the development, acquisition and enhancement of existing facilities. CannapharmaRx is committed to operating high quality facilities utilizing the latest technology in combined heat and power generation to ensure being a low-cost producer of cannabis. CannapharmaRx is in the process of completing an application to list its common stock on the Canadian Stock Exchange with initial trading anticipated to being during the third quarter of 2021.
Safe Harbor Statement
Cautionary Note Regarding Forward-Looking Information or Statements
This press release contains forward-looking information or statements. All statements that are or information which is not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs of future performance, are "forward-looking information or statements". Forward-looking information or statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. With respect to forward-looking information and statements contained herein, Management of CannapharmaRx has made numerous assumptions including, among other things, assumptions about general business and economic conditions. Such forward-looking statements are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking information or statements. Readers are cautioned not to place undue reliance on such forward-looking information or statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking information or statements. CannapharmaRx assumes no obligation to update any forward-looking information or statements, even if new information becomes available as a result of future events, new information or for any other reason except as required by law.
Contact Information for CannapharmaRx:
CannapharmaRx Contact
Attention:
Richard Brown
508-462-9638
Brokers and Analysts:
Chesapeake Group
(410) 825-3930
info@chesapeakegp.com