During August and September 2013, we sold 973,000 units at a price of $1.00 per unit. Each unit consisted of one share of our common stock and one Series A warrant. Each Series A warrant entitles the holder to purchase one share of our common stock at a price of $10.00 per share. On March 31, 2014, four note holders with a combined note balance of $255,000 converted these notes into 51,733 shares of our common stock.
During December 2013 and January 2014, we sold convertible promissory notes in the principal amount of $2,135,000 to 34 accredited investors. The notes bear interest at 12% per year, payable quarterly, mature on October 31, 2018 and are convertible into shares of our common stock, initially at a conversion price of $5.00 per share.
On January 21, 2014, we signed an agreement with Full Circle Capital Corporation, a closed-end investment company. The agreement provides that Full Circle will initially provide $7.5 million to us in the form of Senior Secured Convertible Notes.
Full Circle will provide us with the $7.5 million when:
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Full Circle agrees on the location of the property to be purchased;
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The property’s appraised value is satisfactory to Full Circle;
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A Phase I environmental inspection is completed to the satisfaction of Full Circle; and
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We are able to provide a first priority lien on the property to Full Circle.
We can borrow an additional $22.5 million with the mutual agreement of us and Full Circle.
At least 95% of any loan proceeds will be used to acquire properties which we will lease to licensed marijuana growers.
The six-year loan will be secured by real estate acquired with the loan proceeds and will require interest-only payments at a rate of 12% per year.
The initial loan can, at any time, be converted into shares of our common stock at a conversion price of $5.00 per share. It is contemplated that further advances will be convertible at 110% of the market price of our stock on the day of advance, or the ten-day volume-weighted average price prior to the day of advance, whichever is lower.
The funding of the loan is subject to the execution of additional documents between the parties.
Full Circle also purchased, for $500,000, warrants which allow Full Circle to purchase up to 1,000,000 shares of our common stock at any time on or prior to January 21, 2017 at a price of $5.50 per share.
