ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
As previously disclosed on Advanced Cannabis Solutions’ (the “Company”) Current Report on Form 8-K filed with the Securities and Exchange Commission on January 22, 2014, the Company entered into a Securities Purchase Agreement (the “SPA”) with Full Circle Capital Corporation (“Full Circle”), which provided that, subject to certain conditions set forth in the SPA, the Company may issue to Full Circle senior secured promissory notes for the principal amount of up to $7,500,000, and upon mutual agreement between the Company and Full Circle, the Company can subsequently issue to Full Circle additional promissory notes with an aggregate principal amount of up to $22,500,000. Pursuant to the terms of the SPA, the foregoing initial $7,500,000 promissory note could be converted into shares of the Company’s common stock at any time after issuance at a conversion price of $5.00 per share. Also in connection with the SPA, on January 21, 2014, the Company sold Full Circle a Warrant to Purchase Common Stock (the “Warrant”) providing for the purchase of up to 1,000,000 shares of the Company’s common stock at a price of $5.50 per share.
On September 24, 2014, the Company and Full Circle entered into Amendment No. 1 to the SPA, which changed the conversion price of the initial $7,500,000 promissory note to $4.00 per share of the Company’s common stock. Also on September 24, 2014, and in connection with Amendment No.1 to the SPA, the Company and Full Circle entered into Amendment No. 1 to the Warrant, which changed the exercise price of the warrants issuable pursuant to the Warrant to $4.00 per share of the Company’s common stock, and increased the amount of warrants issuable pursuant to the terms of the Warrant to 1,400,000 warrants to purchase shares of the Company’s common stock.
The foregoing summary of Amendment No.1 to the SPA and Amendment No.1 to the Warrant is not intended to be complete and is qualified in its entirety by reference to such documents. A copy of Amendment No.1 to the SPA and Amendment No.1 to the Warrant is attached collectively as Exhibit 10.1 to this Current Report on Form 8-K.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02 in its entirety.
The issuance of the promissory notes and warrants to purchase shares of the Company’s common stock in connection with the amended SPA and amended Warrant were not registered under the Securities Act and were not issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder. Certificates representing shares underlying the promissory notes and warrants will contain a legend stating the restrictions applicable to such shares.
ITEM 8.01 OTHER EVENTS
On September 25, 2014, the Company filed a lawsuit in the United States District Court for the District of Colorado against Stephen G. Calandrella (“Calandrella”) in order to recover the profits Calandrella obtained through short-swing trading in the Company’s common stock. Such profits, which the Company believes Calandrella obtained unlawfully, are rightfully owed to the Company. The Company brought the lawsuit against Calandrella under section 16(b) of the Exchange Act.
According to the complaint filed in federal court, Calandrella failed to report all of his holdings of the Company’s common stock to the Company. Instead, while a principal stockholder, he engaged in a series of purchases and sales of the Company’s common stock within a six-month period in violation of federal securities law. Pursuant to section 16(b) of the Exchange Act, the complaint demands that Calandrella return to the Company his profits on such trades with interest. The lawsuit is captioned Advanced Cannabis Solutions, Inc. v. Stephen G. Calandrella, Colorado District Court Civil Action No. 14-CV-02649.
