UNITED STATES
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): April 13, 2015
AMERICANN, INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-54231 27-4336843
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
3200 Brighton Blvd., Unit 144
Denver, CO 80216
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(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (303) 862-9000
(Former name or former address if changed since last report)
Check 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-14(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry Into a Material Definitive Agreement
On September 21, 2014 AmeriCann entered into two loan agreements with
Wellness Group Pharms, LLC ("WGP"). Subsequent to entering into the loan
agreements WGP, applied to the state of Illinois for licenses to operate two
marijuana cultivation facilities under the Illinois Compassionate Use of Medical
Cannabis Pilot Program Act.
On February 2, 2015 WGP was notified that it was awarded one of the two
licenses for which it applied under the Illinois Act. The State only issued a
total of 18 cultivation and processing licenses.
Under the terms of the loan agreement pertaining to the license awarded to
WGP, AmeriCann had agreed to loan WGP up to $4,700,000, subject to certain
conditions. Proceeds from the loan would be used to construct the marijuana
cultivation facility and for start-up costs.
On February 23, 2015 AmeriCann and WGP amended their agreement and expanded
the scope of their partnership.
The amended agreement called for AmeriCann to serve as the developer of a
new facility to be called the Illinois Medical Cannabis Center.
AmeriCann was to serve as the project developer and would own the IMCC,
plus provide working capital funding and horticultural assistance to WGP.
The expanded Agreement included a Draw Schedule by which AmeriCann was
required to provide construction capital to build the IMCC project and for
Working Capital to be supplied to WGP.
AmeriCann provided initial funding of $600,000 to WGP on February 23, 2015
in accordance with Draw #1.
The budgeted amount for Draw #2 was $379,333. Prior to the funding of this
amount for Draw #2, WGP requested that AmeriCann fund an additional $214,522,
not initially scheduled for Draw #2, for an essential metal building that was to
be delivered earlier than anticipated by WGP. The original Agreement scheduled
this item to be paid from Draw #4. With this request, WGP agreed to transfer
certain non-essential items for Draw #2 to future draws to accommodate the
additional expense for the building.
AmeriCann provided in excess of $405,000 for Draw #2, which exceeded the
Draw #2 requirements by approximately $26,000. The total capital provided by
AmeriCann after Draw #2 was in excess of $1,000,000.
On April 7, 2015, WGP sent notice to AmeriCann claiming that the $214,522
payment that AmeriCann made for the building was not authorized by WGP and that
AmeriCann's payment for building was made "...at its own election." WGP further
claimed that AmeirCann failed to provide funding pursuant to the original plan
and as a result the agreements between AmeriCann and WGP were void.
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On April 10, 2015, WGP notified AmeriCann that the relationship between
AmeriCann and WGP could continue only if AmeriCann agreed to accept significant
changes to the original agreements. In this correspondence, WGP made eight
demands including the following:
(1) That AmeriCann provide an extra $2,000,000 in working capital to WGP,
(2) That AmeriCann agree to reduce the interest rate on the working
capital loan to WGP by 6%, and
(3) That AmeriCann would not pay vendors and suppliers directly, but
rather that all funds had to be provided to WGP for disbursements.
AmeriCann's management believed that WGP's notice to void the agreements
was without merit and that this was merely an attempt to renegotiate the terms
of a valid contract.
AmeriCann rejected WGP's proposal outright.
AmeriCann has notified WGP that AmeriCann has fulfilled its obligations
pursuant to its agreements with WGP but due to WGP's anticipatory breach of
contract, repeated lack of good faith and fair dealing, AmeriCann's agreements
with WGP were terminated.
AmeriCann will take all necessary steps to recover its investment and to
pursue its claims against WGP.
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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.
Date: April 21, 2015
AMERICANN, INC.
By: /s/ Timothy Keogh
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Timothy Keogh, Chief Executive Office
