CPMD 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 28, 2021
CannaPharmaRx, Inc.
(Exact name of small business issuer as specified in its charter)
| Delaware | 333-251016 | 24-4635140 |
|
(State or other jurisdiction of incorporation)
|
(Commission File Number) | (IRS Employer ID No.) |
3600
888-3rd Street SW
Calgary, Saskatchewan, 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 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 |
Securities registered pursuant to Section 12(g) of the Act:
| Title of each Class | Trading Symbol | Name of Each Exchange on Which Registered |
| Common Stock ($0.0001 par value) | CPMD | OTC |
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. ☐
| 1 |
| Item 1.01 | Entry into a Material Definitive Agreement |
On January 18, 2021, CannaPharmaRx, Inc. (the “Company”) entered into a Purchase and Sale Agreement (the “PSA”) for a certain property in Saskatchewan, Canada. Pursuant to the PSA, the Company has entered into a definitive agreement to purchase certain assets including the title to related fee simple lands and facility required for the cannabis cultivation and production business, located at and operated out of Saskatoon, Saskatchewan. The transaction, subject to certain closing conditions, is scheduled to close in February 2021.
The Company is purchasing the facilities, free and clear of all encumbrances other than those agreed to in the Purchase and Sale Agreement. The 97,000 square foot facility is capable of producing 4,000 kilograms of cannabis biomass per year. The facility currently holds Health Canada licenses for cultivation and sales of medical dried flower sale, as well as extract and product sales. The facility is a fully operational cultivation, extraction and R & D entity that also contains space leased to its genetics partnership. The Company will apply to Health Canada for its own licensing approvals for all cannabis related activities.
The Company will pay the “Purchase Price” for the facility which means the sum of: (i) $12,000,000 and (ii) the Purchaser’s Share of the Option Purchase Price, not including Goods and Services Tax. The payment schedule for the Purchase Price will be a deposit of $100,000 paid on execution of the PSA, the $5,900,000.00, plus 50% of the Purchaser’s Share of the Option Purchase Price, plus the deposit, together with any Goods and Services Tax thereon, subject to adjustments as hereinafter described, shall be paid to the Seller’s solicitor on or before the Closing Date; then $3,000,000 plus the remaining 50% of the Purchaser’s Share of the Option Purchase Price, together with any Goods and Services Tax thereon, shall be paid within 3 Business Days of the Cultivation Licensing Approval Date; and then $3,000,000, together with any Goods and Services Tax thereon, shall be paid within 3 Business Days of the Processing Licensing Approval Date. All denomination of dollars in this Form 8-K are in Canadian Dollars.
The material the terms of the PSA are included in that certain Press Release attached hereto and incorporated herein as if set forth as Exhibit 99.1.
The Company is seeking Confidential Treatment of the PSA from the Securities and Exchange Commission and has therefore withheld the PSA at this time.
| Item 7.01 | Regulation FD Disclosure |
Attached is a copy of a press release being issued by the Company relating to the PSA, a copy of which is attached as Exhibit 99.1 and is hereby incorporated.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Number | Exhibit |
| 99.1 | Press release titled “CannaPharmaRx, Inc. Announces the Acceptance of its Offer to Purchase Assets and Facilities Located in Saskatoon, Saskatchewan”, dated January 28, 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 28, 2021 | CANNAPHARMARX, INC. |
| By: /s/ Dominic Colvin | |
| Dominic Colvin | |
| Chief Executive Officer |
| 3 |
Exhibit 99.1
CannaPharmaRx, Inc. Announces the Acceptance of its Offer to Purchase Assets and Facilities Located in
Saskatoon, Saskatchewan
Purchase is financed through non-dilutive funding
Represents the second facility contracted for purchase by CannaPharmaRx in 2021 for combined manufacturing and cultivation of over 152,200 square feet.
Combined production capability of 9,200 kilograms of cannabis per year
CALGARY, AB / ACCESSWIRE / January 28, 2021 / CannaPharmaRx, Inc. (OTC PINK:CPMD) a future leader in ultramodern, highly efficient cannabis production facilities in Canada announced today the acceptance of its offer to purchase the facilities, as well as certain assets within and/or related to such facilities, including the title to related fee simple lands (the “Facilities”) required for the cannabis cultivation and production business located at, and operated out of, Sasksatoon, Saskatchewan. As previously disclosed, CannaPharmaRx announced a similar acceptance of another offer with facilities located in Cremona, Alberta.
Both facilities are scheduled to close, subject to certain closing conditions, including satisfaction of due diligence and board approval, in the first quarter of 2021. CannaPharmaRx will purchase the facilities free and clear of all encumbrances, other than those agreed to by the CannaPharmaRx.
The 97,000 square foot facility has the capability to produce 4,000 kilograms per year, focusing on medical dried flower sales as well as extract and products pursuant to Health Canada licenses. The facility is a fully operational cultivation, extraction and R & D entity that also contains space leased to its genetics partnership. The purchase price of 12,000,000 (subject to standard closing adjustments) will be paid as to $6,000,000 at closing and the balance in tranches of $3,000,000 upon CannaPharmaRx securing the required cultivating license and then processing license from Health Canada, respectively, in respect of the cannabis related activities upon the closing of this transaction to be carried on at the facilities and for which CannaPharmaRx. As with the Cremona facility, funds required to satisfy payment of that portion of the purchase price that is payable at closing is expected to be funded pursuant to the commitment letter previously announced on January 19, 2021 and to be secured by the facilities.
“We couldn’t be happier to have had our offer accepted in order to acquire a second turn-key facility from one of the preeminent cannabis companies in the industry,” said Nick Colvin, CEO of CannaPharmaRx. “Furthermore, to have favorable, non-dilutive financing available allows for material growth without affecting our capital structure. With our strong capability to oversee business development coupled with the high-tech, low-cost production facilities being purchased, we feel this is a potential watershed moment for our company. We are confident that this acquisition, as well as our other recent purchase in Cremona, will become accretive shortly after the closing because most of the infrastructure is already in place in both facilities," added Colvin.
| 1 |
About CannaPharmaRx, Inc.
CannaPharmaRx is focused on the acquisition and development of state-of-the-art cannabis grow facilities located in Canada. CPMD owns an interest in a licensed cannabis cultivation company, which owns a 48,500 square foot cannabis grow facility presently in operation 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 2020.
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
[email protected]
(508) 462-1524
Brokers and Analysts:
Chesapeake Group
(410) 825-3930
| 2 |