VREOF 8-K
Vireo Growth Inc. (VREOF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of Incorporation)
| (Commission File Number) | (IRS Employer Identification No.) | |
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| (Address of principal executive offices) | (Zip Code) |
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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 (see General Instruction A.2. below):
| 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 |
| N/A | N/A | N/A |
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 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 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 March 14, 2025, Vireo Growth Inc. (the “Company”) entered into the First Amendment to Merger Agreement (the “Proper Amendment”) with Vireo PR Merger Sub Inc. (“Proper Merger Sub 1”), Vireo PR Merger Sub II Inc. (“Proper Merger Sub 2” and together with Proper Merger Sub 1, the “Proper Merger Subs”), NGH Investments, Inc. (“NGH”), Proper Holdings Management, Inc. (“Proper MSA Newco” and together with NGH, the “Proper Companies”) and Proper Holdings, LLC (“Holdings”), which amended the Agreement and Plan of Merger, by and among the Company, the Proper Merger Subs, Holdings, and Shareholder Representative Services LLC (“Representative”), dated December 18, 2024 (the “Proper Merger Agreement”). On March 14, 2025, the Company entered into the First Amendment to Merger Agreement with Vireo DR Merger Sub Inc. (“Deep Roots Merger Sub”), and Deep Roots Holdings, Inc. (“Deep Roots”), which amended the Agreement and Plan of Merger, by and among the Company, Deep Roots Merger Sub, Deep Roots, and Representative, dated December 18, 2024 (the “Deep Roots Merger Agreement”). On March 17, 2025, the Company entered into the First Amendment to Merger Agreement (the “Wholesome Amendment” and collectively with the Proper Amendment and the Deep Roots Amendment, the “Amendments”) with Vireo WH Merger Sub Inc. (“Wholesome Merger Sub” and collectively with the Proper Merger Subs and the Deep Roots Merger Subs, the “Merger Subs”), and WholesomeCo, Inc. (“Wholesome”), which amended the Agreement and Plan of Merger, by and among the Company, Wholesome Merger Sub, Wholesome, and Representative, dated December 18, 2024 (the “Wholesome Merger Agreement” and collectively with the Proper Merger Agreement and the Deep Roots Merger Agreement, the “Merger Agreements”).
All of the Amendments amend and replace Section 2.08(d) of the Merger Agreements, and clarify that, in connection with the mergers between the Merger Subs and each of the Proper Companies, Deep Roots, and Wholesome, the surviving companies will not issue any additional shares of their capital stock to the Company in connection with such mergers, other than with respect to the conversion of each share of issued and outstanding capital stock of each Merger Sub into one newly issued share of the common stock of the applicable surviving company. These amendments do not change any of the merger consideration payable by the Company under any of the Merger Agreements.
Each of the Proper Merger Agreement and the Wholesome Merger Agreement previously provided that the Wholesome stockholders, the Proper equityholders, and Arches IP, Inc. (“Arches”) option holders are collectively entitled to earnout payments (the “E-Commerce Earn-Out Payments”) based on the performance of Arches, based on the greater of US$37.5 million or 5x certain revenue percentages of Arches, with such revenue percentage amounts measured at the higher of trailing-twelve-month or nine-month annualized amounts as of December 31, 2026, paid out using a share price for the Company’s subordinate voting shares at the higher of US$1.05 or 20-day VWAP as of December 31, 2026.
The Proper Amendment Agreement and the Wholesome Amendment Agreement amended this calculation to provide that such persons are collectively entitled to E-Commerce Earn-Out Payments based on an amount equal to the greater of (i) US$37.5 million or (ii) 5x certain revenue percentages of Arches minus $4,000,000. No amendments were made to the measurement period.
The Proper Merger Agreement previously provided that the recipients (the “Proper Share Recipients”) of the Company’s subordinate voting shares (the “Subordinate Voting Shares”) under the Proper Merger Agreement will be required to forfeit a portion of the Subordinate Voting Shares received by such Proper Share Recipients as merger consideration in the event that (i) (a) the higher of (I) the consolidated trailing twelve (12) month adjusted EBITDA of the Proper Companies and their subsidiaries for the twelve full calendar months ending December 31, 2026, and (II) the consolidated trailing nine (9) month adjusted EBITDA of the Proper Companies and their subsidiaries for the last nine (9) months of calendar year 2026, such amount annualized to reflect a full 12-month period, is less than (b) ninety-six and one-half percent (96.5%) of the closing EBITDA of $31,000,000; and (ii) (a) consolidated market share in Missouri of the Proper Companies and their subsidiaries for the year ended December 31, 2026 is less than consolidated market share in Missouri of the Proper Companies and their subsidiaries for the year ended December 31, 2024, or (b) the consolidated EBITDA margin of the Proper Companies and their subsidiaries for the year ended December 31, 2026 is less than the consolidated EBITDA margin of the Proper Companies and their subsidiaries for the year ended December 31, 2024; and (iii) the 20-day volume weighted average price of such Subordinate Voting Shares during the 20 trading day period ending on the trading day immediately prior to December 31, 2026 is greater than $1.05 per Subordinate Voting Share.
The Proper Amendment Agreement amended this forfeiture provision to require Proper Share Recipients to forfeit a portion of the Subordinate Voting Shares received by such Proper Share Recipients as merger consideration in the event that (i) (a) the higher of (I) the consolidated trailing twelve (12) month adjusted EBITDA of the Proper Companies and their subsidiaries for the twelve full calendar months ending December 31, 2026, and (II) the consolidated trailing nine (9) month adjusted EBITDA of the Proper Companies and their subsidiaries for the last nine (9) months of calendar year 2026, such amount annualized to reflect a full 12-month period, is less than (b) the closing EBITDA of $31,000,000.
Certain additional amendments were made to the Wholesome Merger Agreement pursuant to the Wholesome Amendment Agreement in order to allow Arches to issue additional options to its employees after the signing of the Wholesome Merger Agreement. These amendments are not expected to materially change the aggregate E-Commerce Earn-Out Payments made to the Proper equityholders, the Wholesome stockholders, and the holders of Arches options pursuant to the Proper Merger Agreement and the Wholesome Merger Agreement.
This summary of the Amendments is qualified in its entirety by reference to the full text of the Amendments, which are attached hereto as Exhibits 10.1, 10.2 and 10.3 and are incorporated herein by reference.
| Item 5.07 | Submission of Matters to a Vote of Security Holders. |
On March 19, 2025, security holders of approximately 51.5% of the outstanding voting power of the Company’s Subordinate Voting Shares and Multiple Voting Shares (such security holders, the “Majority Shareholders”) approved certain actions by written consent (the “Written Consent”). Pursuant to the Written Consent, the Majority Shareholders approved:
| · | the Company’s previously disclosed transactions with (a) Deep Roots (the “Deep Roots Merger”); (b) Holdings and the Proper Companies (the “Proper Mergers”); and (c) Wholesome (the “Wholesome Merger”); |
| · | the issuance of: |
| ○ | (a) Subordinate Voting Shares, at a deemed price per share of $0.52, as consideration to Deep Roots stockholders in connection with the Deep Roots Merger and such number of additional Subordinate Voting Shares (if any) pursuant to and priced in accordance with the earn-out provisions of the Deep Roots Merger Agreement, as earnout payments to former Deep Roots stockholders based on growth performance, in accordance with and subject to the terms of the Deep Roots Merger Agreement; |
| ○ | (b) Subordinate Voting Shares, at a deemed price per share of $0.52, as consideration to Proper equityholders in connection with the Proper Mergers and such number of additional Subordinate Voting Shares (if any) pursuant to and priced in accordance with the earn-out provisions of the Proper Merger Agreement, as earnout payments to former Proper equityholders based on growth performance, in accordance with and subject to the terms of the Proper Merger Agreement; and |
| ○ | (c) Subordinate Voting Shares, at a deemed price per share of $0.52, as consideration to Wholesome stockholders in connection with the Wholesome Merger and such number of additional Subordinate Voting Shares (if any) pursuant to and priced in accordance with the earn-out provisions of the Wholesome Merger Agreement, as earnout payments to former Wholesome stockholders based on growth performance, in accordance with and subject to the terms of the Wholesome Merger Agreement; and |
| · | the grant of 19,000,000 time-based restricted stock units (“RSUs”) and 19,000,000 performance-based RSUs to John Mazarakis, Chief Executive Officer and Co-Executive Chairman of the Company, and the grant of 9,500,000 time-based RSUs and 9,500,000 performance-based RSUs to Tyson Macdonald, Chief Financial Officer of the Company. |
On March 11, 2025, the Company filed a preliminary Information Statement on Schedule 14C with the U.S. Securities and Exchange Commission with respect to the matters approved by the Majority Shareholders and, as soon as it may do so, will mail the definitive Information Statement on Schedule 14C to its shareholders of record as of February 6, 2025. None of the transactions approved by Written Consent may be effected earlier than twenty calendar days following the mailing of the Information Statement.
| Item 9.01. | Financial Statements and Exhibits |
(d) Exhibits.
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.
| VIREO GROWTH INC. | ||
| (Registrant) | ||
| By: | /s/ Tyson Macdonald | |
| Tyson Macdonald | ||
| Chief Financial Officer | ||
Date: March 20, 2025
Exhibit 10.1
EXECUTION VERSION
FIRST AMENDMENT TO
MERGER AGREEMENT
THIS FIRST AMENDMENT TO MERGER AGREEMENT (this “Amendment”) is made and entered into effective as of March 14, 2025, by and among Vireo PR Merger Sub Inc., a Missouri corporation (“Merger Sub 1”), Vireo PR Merger Sub II Inc., a Missouri corporation (“Merger Sub 2”), Vireo Growth Inc., a British Columbia corporation (“Parent”), NGH Investments, Inc., a Missouri corporation (“NGH”), Proper Holdings Management, Inc., a Missouri corporation (“MSA Newco” and together with NGH, the “Companies” and each a “Company”), Proper Holdings, LLC, a Missouri limited liability company (“Holdings”). Each of the Merger Sub 1, Merger Sub 2, Parent, the Companies, and Holdings are referred to herein as a “Party” and collectively as the “Parties”.
BACKGROUND
Reference is made to that certain Agreement and Plan of Merger, by and among the Parties and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of Holdings and the Parent Share Recipients, dated as of December 18, 2024 (the “Agreement”). The Parties desire to amend the Agreement as set forth herein. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.
AGREEMENT
For good and valuable consideration, the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Amendment to Section 2.08(d). Section 2.08(d) of the Agreement is hereby deleted in its entirety and replaced as follows:
“(d) The conversion of the shares of each of Merger Sub 1 and Merger Sub 2 issued and outstanding as of immediately prior to the Mergers into shares of the common stock, par value $0.001 per share, of each applicable Surviving Company pursuant to Section 2.08(a) above shall be effected in full consideration for Parent issuing the Parent Shares in connection with the Closing Share Payment and paying down the Indebtedness and any unpaid Transaction Expenses pursuant to and in accordance with the terms and conditions of this Agreement, and the parties hereto acknowledge and agree that such conversion constitutes full and adequate consideration for the issuance of the Parent Shares and the payments by Parent described above.”
2. Amendment to Section 2.19(g).
(a) Section 2.19(g) of the Agreement is hereby deleted in its entirety and replaced as follows:
“(g) In the event that:
(i) the higher of (A) the Acquired Companies’ consolidated trailing twelve (12) month Adjusted EBITDA for the twelve full calendar months ending December 31, 2026, and (B) the Acquired Companies’ consolidated trailing nine (9) month Adjusted EBITDA for the last nine (9) months of calendar year 2026, such amount annualized to reflect a full 12-month period,
is less than
(ii) the Closing EBITDA (the absolute value of the amount of the deficiency of Section 2.19(g)(i) to the amount calculated in this Section 2.19(g)(ii), if any, the “EBITDA Deficiency”);
then, Holdings and each Parent Share Recipient will, within ten (10) Business Days of such determination, transfer to Parent a number of Parent Shares, rounded up to the nearest whole number, held by such Person equal to its Pro Rata Share of the quotient of the Forfeiture Amount divided by the Closing Share Price.
Notwithstanding anything contained herein to the contrary, in no event shall the total number of Parent Shares forfeited under this Section 2.19(g) in the aggregate be in excess of 50% of the total Parent Shares issued as Actual Closing Merger Consideration (excluding, for purposes of this calculation, any Parent Shares issued as consideration for the Arches Value Amount).”
3. Amendment to Definition of Aggregate E-Commerce Earn-Out Amount. The definition of “Aggregate E-Commerce Earn-Out Amount” is hereby deleted in its entirety and replaced as follows:
““Aggregate E-Commerce Earn-Out Amount” means an amount equal to the greater of (a) $37,500,000 or (b) the sum of (i) (A) five (5) multiplied by (B) the E-Commerce Earn-Out Revenue Amount minus (ii) $4,000,000.”
4. Amendment to Definition of Market Share. The definition of “Market Share” set forth in the Agreement is hereby deleted in its entirety.
5. Miscellaneous. Except as expressly modified by this Amendment, the Agreement shall remain unmodified and in full force and effect. The terms of Article 11 of the Agreement shall apply to this Amendment, as applicable, as if fully set forth herein.
[Signatures appear on the following page.]
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed effective as of the day and year first set forth above.
| MERGER SUB 1: | ||
| VIREO PR MERGER SUB INC. | ||
| By: | /s/ Amber Shimpa | |
| Name: | Amber Shimpa | |
| Title: | President | |
| MERGER SUB 2: | ||
| VIREO PR MERGER SUB II INC. | ||
| By: | /s/ Amber Shimpa | |
| Name: | Amber Shimpa | |
| Title: | President | |
| PARENT: | ||
| VIREO GROWTH INC. | ||
| By: | /s/ John Mazarakis | |
| Name: | John Mazarakis | |
| Title: | Chief Executive Officer | |
| COMPANIES: | ||
| NGH INVESTMENTS, INC. | ||
| By: | /s/ John Pennington | |
| Name: | John Pennington | |
| Title: | Chief Executive Officer | |
| PROPER HOLDINGS MANAGEMENT, INC. | ||
| By: | /s/ John Pennington | |
| Name: | John Pennington | |
| Title: | Chief Executive Officer | |
| HOLDINGS: | ||
| PROPER HOLDINGS, LLC | ||
| By: | /s/ John Pennington | |
| Name: | John Pennington | |
| Title: | Chief Executive Officer | |
[Signature Page to First Amendment to Agreement and Plan of Merger]
Exhibit 10.2
FIRST AMENDMENT TO
MERGER AGREEMENT
This FIRST AMENDMENT TO MERGER Agreement (this “Amendment”) is made and entered into effective as of March 14, 2025, by and among Vireo DR Merger Sub Inc. (“Merger Sub”), Vireo Growth Inc., a British Columbia corporation (“Parent”), and Deep Roots Holdings, Inc., a Nevada corporation (the “Company”). Each of the Merger Sub, Parent, and the Company are referred to herein as a “Party” and collectively as the “Parties”.
BACKGROUND
Reference is made to that certain Agreement and Plan of Merger, by and among the Parties and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of the Stockholders, dated as of December 18, 2024 (the “Agreement”). The Parties desire to amend the Agreement as set forth herein. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.
AGREEMENT
For good and valuable consideration, the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Amendment to Section 2.08(d). Section 2.08(d) of the Agreement is hereby deleted in its entirety and replaced as follows:
“(d) The conversion of the shares of Merger Sub issued and outstanding as of immediately prior to the Merger into a share of the common stock, par value $0.001 per share, of the Surviving Corporation pursuant to Section 2.08(a) above shall be effected in full consideration for Parent issuing the Parent Shares in connection with the Closing Share Payment, any payments to Dissenting Shareholders, and paying down the Indebtedness and any unpaid Transaction Expenses pursuant to and in accordance with the terms and conditions of this Agreement, and the parties hereto acknowledge and agree that such conversion constitutes full and adequate consideration for the issuance of the Parent Shares and the payments by Parent described above.”
2. Miscellaneous. Except as expressly modified by this Amendment, the Agreement shall remain unmodified and in full force and effect. The terms of Article 11 of the Agreement shall apply to this Amendment, as applicable, as if fully set forth herein.
[Signatures appear on the following page.]
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed effective as of the day and year first set forth above.
| MERGER SUB: | ||
| VIREO DR MERGER SUB INC. | ||
| By: | /s/ Amber Shimpa | |
| Name: | Amber Shimpa | |
| Title: | President | |
| PARENT: | ||
| VIREO GROWTH INC. | ||
| By: | /s/ John Mazarakis | |
| Name: | John Mazarakis | |
| Title: | Chief Executive Officer | |
| THE COMPANY: | ||
| DEEP ROOTS HOLDINGS, INC. | ||
| By: | /s/ Keith Capurro | |
| Name: | Keith Capurro | |
| Title: | Chief Executive Officer | |
Exhibit 10.3
EXECUTION VERSION
FIRST AMENDMENT TO MERGER AGREEMENT
THIS FIRST AMENDMENT TO MERGER AGREEMENT (this “Amendment”) is made and entered into effective as of March 17, 2025, by and among Vireo WH Merger Sub Inc. (“Merger Sub”), Vireo Growth Inc., a British Columbia corporation (“Parent”), and WholesomeCo, Inc., a Delaware corporation (the “Company”). Each of the Merger Sub, Parent, and the Company are referred to herein as a “Party” and collectively as the “Parties”.
BACKGROUND
Reference is made to that certain Agreement and Plan of Merger, by and among the Parties and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of the Stockholders, dated as of December 18, 2024 (the “Agreement”). The Parties desire to amend the Agreement as set forth herein. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.
AGREEMENT
For good and valuable consideration, the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:
| (a) | Amendments to Article I. |
| i. | The definition of “Aggregate E-Commerce Earn-Out Amount” is hereby deleted in its entirety and replaced as follows: |
““Aggregate E-Commerce Earn-Out Amount” means an amount equal to the greater of (a) $37,500,000 or (b) the sum of (i) (A) five (5) multiplied by (B) the E-Commerce Earn-Out Revenue Amount minus (ii)
$4,000,000.”
| ii. | The definition of “Closing Date Option Share Number” is hereby deleted in its entirety and replaced as follows: |
““Closing Date Option Share Number” means the total number of shares of Arches capital stock subject to outstanding (and not otherwise forfeited) Arches Options, and any shares of Arches capital stock issued upon the exercise of any such Arches Options, in each case determined as of the Closing Date.”
| iii. | The definition of “Closing Option Percentage” is hereby deleted in its entirety and replaced as follows: |
““Closing Option Percentage” means the quotient, stated as a percentage, of (a) the total number of shares of Arches capital stock subject to all outstanding Arches Options, and any shares of Arches capital stock issued upon the exercise of any such Arches Options, divided by (b) the sum of (i) the total number of issued and outstanding shares of Arches capital stock, plus (ii) the total number of shares of Arches capital stock subject to all outstanding Arches Options, in each case, determined as of the Closing.”
| iv. | The definition of “Earn-Out Period Option Share Number” is hereby deleted in its entirety and replaced as follows: |
““Earn-Out Period Option Share Number” means the total number of shares of Arches capital stock subject to outstanding (and not otherwise forfeited) Arches Options, and any shares of Arches capital stock issued upon the exercise of such Arches Options, in each case determined as of the last day of the E-Commerce Earn-Out Measurement Period; provided that the Earn-Out Period Option Share Number shall not include any shares of Arches capital stock subject to outstanding (and not otherwise forfeited) Arches Options that are issued after the Closing, or any shares of Arches capital stock issued upon the exercise of such Arches Options.”
| (b) | Amendment to Section 2.08(d). Section 2.08(d) of the Agreement is hereby deleted in its entirety and replaced as follows: |
“(d) The conversion of the shares of Merger Sub issued and outstanding as of immediately prior to the Merger into a share of the common stock, par value $0.001 per share, of the Surviving Corporation pursuant to Section 2.08(a) above shall be effected in full consideration for Parent issuing the Parent Shares in connection with the Closing Share Payment, any payments to Dissenting Shareholders, and paying down the Indebtedness and any unpaid Transaction Expenses pursuant to and in accordance with the terms and conditions of this Agreement, and the parties hereto acknowledge and agree that such conversion constitutes full and adequate consideration for the issuance of the Parent Shares and the payments by Parent described above.”
2. Miscellaneous. Except as expressly modified by this Amendment, the Agreement shall remain unmodified and in full force and effect. The terms of Article 11 of the Agreement shall apply to this Amendment, as applicable, as if fully set forth herein.
[Signatures appear on the following page.]
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed effective as of the day and year first set forth above.
| MERGER SUB: | ||
| VIREO WH MERGER SUB INC. | ||
| By: | /s/ Amber Shimpa | |
| Name: Amber Shimpa | ||
| Title: President | ||
| PARENT: | ||
| VIREO GROWTH INC. | ||
| By: | /s/ John Mazarakis | |
| Name: John Mazarakis | ||
| Title: Chief Executive Officer | ||
| THE COMPANY: | ||
| WHOLESOMECO, INC. | ||
| By: | /s/ Christopher Jeffery | |
| Name: Christopher Jeffery | ||
| Title: Chief Executive Officer | ||
[Signature Page to First Amendment to Agreement and Plan of Merger]