HART & HART, LLC
ATTORNEYS AT LAW
1624 Washington Street
Denver, CO 80203
William T. Hart, P.C. ________ Email: harttrinen@aol.com
Will Hart Facsimile: (303) 839-5414
(303) 839-0061
February 14, 2018
Stacie Gorman
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: AmeriCann, Inc.
Registration Statement on Form S-1
File No. 333-222207
Attached are the changes to the Company's registration statement to
reflect:
o changes in response to the comments received from the staff by
telephone on February 13, 2018, and
o the February 12, 2018 sale of convertible notes and warrants.
Very Truly Yours,
HART & HART, LLC
/s/ William T. Hart
William T. Hart
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
Registration Statement Under
THE SECURITIES ACT OF 1933
AMERICANN, INC.
------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 000-54231 27-4336843
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(State or other jurisdiction (Primary Standard Classi- (IRS Employer
of incorporation) fication Code Number) I.D. Number)
1550 Wewatta St.
Denver, CO 80202
(303) 862-9000
------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Timothy Keogh
1550 Wewatta St.
Denver, CO 80202
(303) 862-9000
------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications, including all communications sent
to the agent for service, should be sent to:
William T. Hart, Esq.
Hart & Hart, LLC
1624 Washington Street
---------------------------------------
Denver, Colorado 80203
303-839-0061
As soon as practicable after the effective date of this Registration Statement
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer", "smaller
reporting company" and "emerging growth company" in Rule 12b2 of the Exchange
Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Do not check if a smaller reporting company) 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 to Section 7(a)(2)(B) of the
Securities Act. [ ]
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
---------- ---------- ----------- ------------- --------------
Common Stock (2) $ $10,000,000 $1,264
(1) Offering price computed in accordance with Rule 457(o).
(2) Represents shares to be sold by Mountain States Capital, LLC.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
AMERICANN, INC
Common Stock
This prospectus may be used only in connection with sales of shares of our
common stock by Mountain States Capital, LLC. Mountain States will sell shares
of common stock purchased from us under an Investment Agreement. In connection
with the sale of these shares, Mountain States is an "underwriter" as that term
is defined in the Securities Act of 1933.
The number of shares to be sold by Mountain States in this offering will
vary from time-to-time and will depend upon the number of shares purchased from
us pursuant to the terms of the Investment Agreement. See the section of this
prospectus captioned "Investment Agreement" for more information.
Our common stock is quoted on the over-the-counter market under the symbol
"ACAN". On February 12, 2018 the closing price for one share of our common stock
was $2.87. Based upon this price, we would sell approximately 3,876,000 shares
of common stock to raise $10,000,000 from the Investment Agreement with Mountain
States.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
These securities are speculative and involve a high degree of risk. For a
description of certain important factors that should be considered by
prospective investors, see "Risk Factors" beginning on page 6 of this
prospectus.
The date of this prospectus is _________, 2018
Number of Note
Shares Reference
Shares issuable upon conversion of note held by Strategic 800,000 F
Capital Partners
Shares issuable upon exercise of warrants held by 3,740,000 G
Massachusetts Medical Properties, LLC (Series IV)
Shares issuable upon exercise of Series V warrants 185,000 H
Shares issuable upon exercise of options granted pursuant 150,000 I
to Stock Incentive Plan
Shares issuable upon exercise of warrants granted in 660,000 J
connection with construction loan
Shares issuable upon conversion of loans 78,400 K
Shares issuable upon conversion of loans 533,333 L
Shares issuable upon exercise of warrants 640,000 L
Shares issuable upon conversion of loans 540,000 M
Shares issuable upon exercise of warrants 540,000 M
A. Between October 27, 2016 and November 7, 2016 we sold 2,000,000 units at a
price of $1.00 per unit. Each unit consisted of one share of our common stock
and one Series I Warrant. Each Series I Warrant entitles the holder to purchase
one share of our common stock at a price of $3.00 per share at any time on or
before November 4, 2020.
B. On September 15, 2016 we borrowed $75,000 from three unrelated parties. The
notes bear interest at 12% per year, are unsecured, and are due and payable on
January 14, 2017. At the option of the holder, the notes may be converted into
shares of our common stock at a conversion price of $0.75 per share. As
additional consideration for the loans, we issued 75,000 Series II warrants and
75,000 Series III warrants to the lenders. Each Series II warrant allows the
holder to purchase one share of our common stock at a price of $0.75 per share.
Each Series III warrant allows the holder to purchase one share of our common
stock at a price of $1.25 per share. The Series II and Series III warrants
expire on September 15, 2020.
C. In 2014 we sold 791,000 Units at a price of $3.00 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 $8.00 per share. We intend to offer the holders of the Series A
Warrants 1.5 shares of our common stock in exchange for each Series A Warrant.
If all Series A Warrants are exchanged, the total shares outstanding will
increase by 1,186,500. As of the date of this prospectus, no shares of common
stock had been issued in exchange for the Series A Warrants.
D. The Company has issued warrants/options to the persons and upon the terms
shown below:
The number of shares to be issued upon conversion of the loans will be
determined by dividing the amount of the loan to be converted by the Conversion
Price. If the Market Price of our common stock is greater than or equal to
$1.35, the Conversion Price will be the greater of the Variable Conversion
Price, or $1.00. If the Market Price of our common stock is less than $1.35, the
Conversion Price is equal to the lesser of the Variable Conversion Price or
$1.00 The "Variable Conversion Price" will be 65% of the Market Price. "Market
Price" is the average of the lowest two VWAP's for our common stock during the
fifteen trading day period ending on the latest complete trading day prior to
the Conversion Date. "VWAP" means the dollar volume-weighted average sale price
of our common stock on any particular trading day.
Assuming a conversion price of $2.50 per share, we would issue 78,400
shares of our common stock if both loans were converted.
L. On December 29, 2017 we sold convertible notes in the principal amount of
$800,000 to a group of private investors. The notes bear interest at 8% per
year, are unsecured, and are due and payable on December 31, 2018. At the option
of the note holders, the notes may be converted at any time into shares of our
common stock at an initial conversion price of $1.50 per share.
The note holders also received warrants (Series VI) which entitle the note
holders to purchase up to 533,333 shares of our common stock. The warrants are
exercisable at a price of $1.50 per share and expire on October 17, 2022.
The placement agent for the offering received a cash commission, plus
warrants (Series VII) to purchase 106,667 shares of our common stock. The
warrants are exercisable at a price of $1.50 per share and expire on December
29, 2022.
M. On February 12, 2018 we sold convertible notes in the principal amount of
$810,000 to a group of private investors. The notes bear interest at 8% per
year, are unsecured, and are due and payable on December 31, 2018. At the option
of the note holders, the notes may be converted at any time into shares of our
common stock at an initial conversion price of $1.50 per share. The note holders
also received warrants (Series VIII) which entitle the note holders to purchase
up to 540,000 shares of our common stock. The warrants are exercisable at a
price of $1.50 per share and expire on October 17, 2022.
We may sell additional shares of our common stock, warrants, convertible
notes or other securities to raise additional capital. We have not yet
determined the amount of securities which we may sell, or the price at which the
securities may be sold. We do not have any commitments or arrangements from any
person to purchase any of our securities and there can be no assurance that we
will be successful in selling any additional securities.
On February 12, 2018 we sold convertible notes in the principal amount of
$810,000 to a group of private investors. The notes bear interest at 8% per
year, are unsecured, and are due and payable on December 31, 2018. At the option
of the note holders, the notes may be converted at any time into shares of our
common stock at an initial conversion price of $1.50 per share. The note holders
also received warrants (Series VIII) which entitle the note holders to purchase
up to 540,000 shares of our common stock. The warrants are exercisable at a
price of $1.50 per share and expire on October 17, 2022.
Contractual obligations
The Company leases land under an operating lease commencing October 17,
2016, for an initial term of fifty (50) years. We have the option to extend the
term of the lease for four (4) additional ten (10) year periods. The lease is a
triple net lease, with the Company paying all real estate taxes, repairs,
maintenance and insurance. The lease payments will be the greater of (a) $30,000
per month; (b) $0.38 per square foot per month of any structure built on the
property; or (c) 1.5% of all gross monthly sales of products sold by the
Company, any assignee of the Company, or any subtenant of the Company. The
Company received a credit for the $925,000 paid towards the purchase price of
the land in the form of discounted lease payments. For the initial fifty (50)
year term of the lease, the lease payments will be reduced by $1,542 each month.
The lease expense was $506,765 for the year ended September 30, 2017. No such
expense was incurred in the year ended September 30, 2016.
The Company leases an automobile under an operating lease commencing
October 4, 2014 for 39 months at $611 per month. The lease expense was $7,390
and $7,483 for the years ended September 30, 2017 and 2016, respectively.
At September 30, 2017, the future rental payments required under operating
lease are as follows:
2018 $ 342,406
2019 341,496
2020 341,496
2021 341,496
2022 341,496
Thereafter 15,026,024
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Total $16,734,414
Our material capital commitments for the year ending September 30, 2018
are:
Description Amount Due Date
First phase of construction at MMCC (1) $ 2,600,000 02/17/18
Lease payments (MMCC) $ 342,406 (2)
Repayment of convertible loan $ 128,000 10/15/18
Repayment of convertible loan $ 68,000 11/13/18
Repayment of construction loan $ 199,000 03/30/18
General
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Our offices are located at 1550 Wewatta St., Denver, CO 80202. We lease
this space on a month-to-month basis at a rate of $1,845 per month.
As of January 15, 2018, we had four full time employees, that being Timothy
Keogh, our Chief Executive Officer, Benjamin Barton, Chief Financial Officer,
Brian Corr, Director of Horticultural Science and Operations, and Jane Roach,
our Office Manager. As of September 30, 2017, Mr. Keogh was spending
approximately 90% of his time on our business, Mr. Barton was spending
approximately 95% of his time on our business, Brian Corr was spending
approximately 50% of his time on our business, and Jane Roach was spending
approximately 100% of her time on our business.
MANAGEMENT
Name Age Position
Timothy Keogh 38 Chief Executive Officer and a
Director
Benjamin J. Barton 53 Chief Financial and Accounting
Officer and a Director
The following is a brief summary of the background of each officer and
director including their principal occupation during the five preceding years.
All directors will serve until their successors are elected and qualified or
until they are removed.
Timothy Keogh was appointed our Chief Executive Officer and a director on
March 25, 2014. As our Chief Executive Officer, Mr. Keogh has developed
sustainable practices and traditional horticultural approaches to the production
of medical cannabis to benefit patients in regulated markets. Prior to joining
AmeriCann, Mr. Keogh was the Chief Executive Officer and a director of Coastal
Compassion, Inc., a non-profit corporation that has entered the medical
marijuana business in Massachusetts. This effort began in September of 2012 and
was formalized under Massachusetts G.L. Chapter 180 in August of 2013. Under the
direction of Mr. Keogh, Coastal Compassion, Inc. received 1 a limited number of
provisionally approved licenses in Massachusetts.
Between November 2010 and November 2013 Mr. Keogh owned and managed Dock
Promotions, LLC, a company which provided consulting services to waterfront
developments and marinas in the areas of design, construction, and operations.
Between 2003 and 2010, Mr. Keogh was the Director of Business Services for
Marina Management Services, Inc., a corporation which provided management and
consulting solutions to waterfront developments, marinas and boatyards
throughout the Americas and the Caribbean.
In October 2016, the Company issued 100,000 shares
of its common stock and a warrant to purchase up to 3,640,000
shares of common stock to Massachusetts Medical Properties, LLC.
The warrant can be exercised at a price of $1.00 per share
any time on or after October 17, 2018 and on or before
October 17, 2020. B.C.
In November 2016, the Company sold 2,000,000 Units,
at a price of $1.00 per Unit, to a group of accredited
investors. Each Unit consists of one share of our common
stock and one Series I Warrant. Each Series I Warrant allows
the holder to purchase one share of our common stock at a
price of $3.00 per share at any time on or before November
4, 2020. We paid commissions to GVC Capital, LLC and West
Park Capital, Inc. in connection with the sale of these Units. B.
During the three months ended June 30, 2017, we
sold 185,000 Units at a price of $2.00 per Unit to a group
of accredited investors. Each Unit consisted of one share of
our common stock and one Series V Warrant. Each Series V
Warrant allows the Holder to purchase one share of our common
stock at a price of $5.00 per share at any time on or before
May 18, 2021. A.
On October 5, 2017 we borrowed $128,000 from an
unrelated third party. At any time after April 5, 2018
the Lender may convert the unpaid principal amount of the
loan into shares of our common stock. On November 13, 2017
we borrowed $68,000 from the same unrelated third party.
At any time after May 13, 2018 the lender may convert the
unpaid principal amount of the loan into shares of our
common stock. A.
On December 29, 2017 we sold convertible notes
in the principal amount of $800,000 to a group of private
investors. The notes bear interest at 8% per year, are
unsecured, and are due and payable on December 31, 2018.
At the option of the note holders, the notes may be converted
at any time into shares of our common stock at an initial
conversion price of $1.50 per share.
The note holders also received warrants (Series VI)
which entitle the note holders to purchase up to 533,333 shares
of our common stock. The warrants are exercisable at a price
of $1.50 per share and expire on October 17, 2022.
The placement agent for the offering received a
cash commission, plus warrants (Series VII) to purchase
106,667 shares of our common stock. The warrants are
exercisable at a price of $1.50 per share and expire on December
29, 2022.
B.
On February 12, 2018 we sold convertible notes in
the principal amount of $810,000 to a group of private
investors. The notes bear interest at 8% per year, are
unsecured, and are due and payable on December 31, 2018.
At the option of the note holders, the notes may be converted
at any time into shares of our common stock at an initial
conversion price of $1.50 per share. The note holders also
received warrants (Series VIII) which entitle the note
holders to purchase up to 540,000 shares of our common
stock. The warrants are exercisable at a price of $1.50
per share and expire on October 17, 2022. B.
A. The Company relied upon the exemption provided by Section 4(a)(2) of the
Securities Act of 1933 with respect to the issuance of these shares. The persons
who acquired these shares were sophisticated investors and were provided full
information regarding the Company. There was no general solicitation in
connection with the offer or sale of these securities. The persons who acquired
these shares acquired them for their own accounts. The certificates representing
these shares bear a restricted legend providing that they cannot be sold except
pursuant to an effective registration statement or an exemption from
registration.
B. The Company relied upon the exemption provided by Rule 506 of the Securities
and Exchange Commission with respect to the issuance of these securities. The
persons who acquired these securities were sophisticated investors and were
provided full information regarding the Company. There was no general
solicitation in connection with the offer or sale of these securities. The
persons who acquired these securities acquired them for their own accounts. The
certificates representing these securities bear a restricted legend providing
that they cannot be sold except pursuant to an effective registration statement
or an exemption from registration.
C. No commission or other form of remuneration was given to any person in
connection with the issuance of these securities. Item 16. Exhibits and
Financial Statement Schedules
The following exhibits are filed with this Registration Statement:
3.1.1 Certificate of Incorporation (1)
3.1.2 Certificate of Ownership and Merger (name change to AmeriCann) (2)
3.2 Bylaws (2)
4.1 Form of Series I Warrant (2)
4.2 Form of Series II Warrant (2)
4.3 Form of Series III Warrant (2)
4.4 Form of Series V Warrant (2)
4.5 Form of Series VI Warrant
4.6 Form of Series VII Warrant
5 Opinion of Counsel (2)
10.1 Agreements with Wellness Group Pharms (2)
10.2 Loan Modification Agreement with Strategic Capital Partners, LLC,
together with Warrants and Promissory Notes (2)
NOTE 12. EVENTS (UNAUDITED) SUBSEQUENT TO THE DATE OF THE INDEPENDENT
AUDITOR'S REPORT
December 2017 Financing
On December 29, 2017 the Company sold convertible notes in the principal amount
of $800,000 to a group of accredited investors. The notes bear interest at 8%
per year, are unsecured, and are due and payable on December 31, 2018. At the
option of the note holders, the notes may be converted at any time into shares
of the Company's common stock at an initial conversion price of $1.50 per share.
The note holders also received warrants which entitle the note holders to
purchase up to 533,333 shares of the Company's common stock. The warrants are
exercisable at a price of $1.50 per share and expire on October 17, 2022.
The placement agent for the offering received a cash commission of $64,000, plus
warrants to purchase 106,667 shares of the Company's common stock. The warrants
are exercisable at a price of $1.50 per share and expire on December 29, 2022.
Arbitration Award
In connection with the Company's note receivable from WGP that is subject to
arbitration (see Note 3), the arbitration panel, on January 18, 2018, awarded to
the Company $1,045,000, plus interest at the rate of 18% per year from April 18,
2015 to January 18, 2018 totaling $523,023. In addition to the principal and
interest awarded of $1,568,023, the Company was also awarded its attorneys' fees
and arbitration fees.
February 2018 Financing
On February 12, 2018 the Company sold convertible notes in the principal amount
of $810,000 to a group of private investors. The notes bear interest at 8% per
year, are unsecured, and are due and payable on December 31, 2018. At the option
of the note holders, the notes may be converted at any time into shares of the
Company's common stock at an initial conversion price of $1.50 per share. The
note holders also received warrants (Series VIII) which entitle the note holders
to purchase up to 540,000 shares of the Company's common stock. The warrants are
exercisable at a price of $1.50 per share and expire on October 17, 2022.