AmeriCann : Termination of Material Agreement - Form 8-K
May 07, 2024 at 01:33 pm
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ITEM 1.02TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
On July 26, 2019, the Company entered into a 15-Year Triple Net lease of Building 1 of the Massachusetts Cannabis Center with BASK, Inc. The lease commenced on September 1, 2019 and included a monthly base rent of $11,563.50 and a revenue participation fee equivalent to 15% of BASK's gross revenues derived from products produced in the building.
On May 3, 2024:
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The Company and BASK mutually agreed to modify the lease to conclude on August 31, 2024;
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After August 31, 2024, AmeriCann intends to operate the building as a regulated cannabis cultivation and manufacturing operator;
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AmeriCann and BASK have agreed that, for the last five months of the lease effective April 1, the new monthly payment by BASK will be $57,587.78 per month, inclusive of property taxes and Host Community Agreement fees;
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Bask agreed to transfer to the Company its provisional Cultivation and provisional Product Manufacturing licenses. BASK will receive a credit of $40,000 for each license transferred. Any transfer of licenses is contingent upon approval from the Massachusetts Cannabis Control Commission;
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BASK granted the Company the option to purchase any furniture and equipment located in the space currently occupied by BASK. The Company and BASK will agree on the items that the Company intends to purchase on or before June 1, 2024.
Any licenses, furniture and equipment purchased will serve as a credit towards reducing the amounts due to the Company from Bask ($623,244 as of March 31, 2024). Any remaining balances will be converted to a promissory note which will be paid in 24 equal monthly non interest bearing installment payments. The current promissory note from BASK dated September 30, 2023 (which had an outstanding balance of $369,869 as of March 31, 2024) will be converted into this new consolidated promissory note.
The Company believes that there are potential benefits associated with operating the facility and becoming a regulated operator. These include a transition to a much simpler and direct business model, greater control over building operations and potentially substantially increased revenue and cash flow.
Additionally, the recent announcement by the US Department of Justice of its intention to reclassify cannabis from Schedule I to Schedule III could make returns even more attractive by removing many of the obstacles cannabis operators currently encounter.
The Mutual Lease Modification Agreement is attached as an exhibit to this 8-K report.
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AmeriCann, Inc. is a cannabis company that develops cultivation, processing and product manufacturing facilities. It has provisional licenses to produce cannabis-infused products, including beverages, edibles, topicals and concentrates. It designs GMP-certified cannabis extraction and product manufacturing infrastructure. Its flagship project is the Massachusetts Cannabis Center (MCC), which is being developed on a 52-acre parcel. MCC project is permitted for over 800,000 square feet of cannabis cultivation and processing infrastructure which is being developed in phases to support both the existing medical cannabis and the emerging adult-use cannabis marketplace. The Company, through a 100% owned subsidiary, AmeriCann Brands, Inc., has received two licenses from the Massachusetts Cannabis Control Commission to cultivate cannabis and provide extraction and product manufacturing support to the entire MCC project, as well as to other licensed cannabis farmers throughout regulated market.