Current Report Filing (8-k)
January 15 2021 - 5:29PM
Edgar (US Regulatory)
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
January 11, 2021
Date of Report (Date of earliest event
reported)
Generation Hemp, Inc.
(Exact name of registrant as specified
in its charter)
Colorado
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000-55019
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26-3119496
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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5128 Horseshoe Trail
Dallas, Texas
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75209
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(Address of principal executive offices)
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(Zip Code)
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(469) 209-6154
(Registrant’s
telephone number, including area code)
(Former name or former address, if changed
since last report)
Check the 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):
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☐
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
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 pursuant to Section 13(a) of the Exchange Act. ☐
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Current Report on Form 8-K and other reports filed by
us from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may
contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our
management as well as estimates and assumptions made by our management. When used in the filings the words “anticipate”,
“believe”, “estimate”, “expect”, “future”, “intend”, “plan”
or the negative of these terms and similar expressions as they relate to us or our management identify forward looking statements.
Such statements reflect the current view of our management with respect to future events and are subject to risks, uncertainties,
assumptions and other factors (including the risks contained in the section of this report entitled “Risk Factors”)
as they relate to our industry, our operations and results of operations, and any businesses that we may acquire. Should one or
more of the events described in these risk factors materialize, or should our underlying assumptions prove incorrect, actual results
may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Except as required by applicable law, including the U.S. federal securities laws, we do not intend to update any of the forward-looking
statements to conform them to actual results. The following discussion should be read in conjunction with our pro forma financial
statements and the related notes that will be filed herein.
Introductory Note
As previously disclosed in the Annual
Report on Form 10-K for the Fiscal Year ended December 31, 2019 of Generation Hemp, Inc (“the “Company”),
filed with the Securities and Exchange Commission on December 15, 2020, the Company entered into that certain Asset Purchase
Agreement (the “Purchase Agreement”), dated as of March 7, 2020, by and among Halcyon Thruput, LLC
(“Halcyon Thruput”), GenH Halcyon Acquisition, LLC, the Company, OZ Capital, LLC, OZC Agriculture KY, LP, and
certain owners set forth therein. Pursuant to the Purchase Agreement, the Company announced the purchase of 100% of the
assets of Halcyon Thruput.
Item 1.01 Entry into a Material Agreement
Amendment to Merger Agreement
On January 11, 2021, the Company and the other parties to the
Purchase Agreement entered into the First Amendment to the Purchase Agreement (the “Amendment”), which amended the
Purchase Agreement to amend certain provisions of the Purchase Agreement, which among other things, amended the structure of the
consideration being paid.
The foregoing description of the Amendment is only a summary
and is qualified in its entirety by reference to the complete text of the Amendment, which is filed as Exhibit 10.1 to this Current
Report on Form 8-K and incorporated by reference herein.
Item 2.01 Completion of Acquisition or Disposition
of Assets
On January 11, 2021, the Company completed the previously announced
acquisition of 100% of the assets of Halcyon Thruput pursuant to the Purchase Agreement as amended by Amendment No. 1.
The purchase consideration for the acquired assets totaled approximately
$5.1 million consisting of 6,250,000 shares of Company common stock valued at $2.5 million (valued at $0.40 per share; restricted
from trading for a period of up to one year), $1.75 million in cash, a promissory note for $850 thousand issued by GenH Halcyon
Acquisition, LLC and guaranteed by Gary C. Evans, CEO of the Company, and assumption of approximately $1.0 million of new indebtedness
of Halcyon Thruput.
The Company will continue Halcyon Thruput’s
business of providing post-harvest and midstream services to growers by drying, processing, cleaning, stripping harvested hemp
directly from the field and wetbaled at its 48,000 square foot facility located in Hopkinsville, Kentucky.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information contained in the second
paragraphs of Item 2.01 regarding (a) promissory note for $850 thousand issued by GenH Halcyon Acquisition, LLC and guaranteed
by Gary C. Evans, CEO of the Company and (b) the assumption by the Company of approximately $1.0 million of new indebtedness of
Halcyon Thruput above is incorporated by reference into this Item 2.03.
The foregoing description of the promissory note is only a summary
and is qualified in its entirety by reference to the complete text of the promissory note, which is filed as Exhibits 10.2 to this
Current Report on Form 8-K and incorporated by reference herein. The foregoing description of the assumption by the company
of approximately $1.0 million of new indebtedness is only a summary and is qualified in its entirety by reference to the complete
text of the Guaranty made by the Company in favor of Coventry Asset Management, which is filed as Exhibits 10.3 to this Current
Report on Form 8-K and incorporated by reference herein.
Item
3.02 Unregistered Sales of Equity Securities.
The disclosure set forth in the second
paragraph of Item 2.01 above is incorporated by reference into this Item 3.02. The disclosure set forth in the third paragraph
of Item 5.02 below is incorporated by reference into this Item 3.02.
The securities issued in connection
with the purchase of the assets and the Term Employment Agreements have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”) in reliance on the exemption from registration provided by Section 4(a)(2) of
the Securities Act.
Item
5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Concurrent with
the closing of the asset acquisition on January 11, 2021 described in Item 2.01, the Company entered into a Term Employment Agreement
with Jack Sibley to serve as Vice President of GenH Halcyon Acquisition, LLC for a term of at least two years. Mr. Sibley will
receive a base salary of $175,000 per annum. Mr. Sibley will be eligible for incentive compensation under the Company’s 2020
Omnibus Incentive Plan or any successor plan and will be eligible for annual performance bonuses each year. Any such award will
be subject to the terms and conditions of the Company’s 2020 Omnibus Incentive Plan and applicable award agreement. Mr. Sibley
is eligible to participate in the Company’s benefit programs as made generally available to other senior executives.
Also concurrent
with the closing of the asset acquisition on January 11, 2021 described in Item 2.01, the Company entered into a Term Employment
Agreement with Watt Stephens to serve as Vice President and Secretary of GenH Halcyon Acquisition, LLC for a term of at least two
years. Mr. Stephens will receive a base salary of $175,000 per annum. Mr. Stephens will be eligible for incentive compensation
under the Company’s 2020 Omnibus Incentive Plan or any successor plan and will be eligible for annual performance bonuses
each year. Any such award will be subject to the terms and conditions of the Company’s 2020 Omnibus Incentive Plan and applicable
award agreement. Mr. Stephens is eligible to participate in the Company’s benefit programs as made generally available to
other senior executives.
The Term Employment
Agreements with Mr. Sibley and Mr. Stephens each provide for the issuance of 250,000 shares of restricted common stock of the Company
as a signing bonus. Such shares are subject to restrictions on the trading or transfer of such common stock as described therein.
Further, the Term
Employment Agreements with Mr. Sibley and Mr. Stephens each provide for the payment by the executives of liquidated damages if
the Employee terminates his employment without Good Reason during the Initial Term, other than due to the Employee’s death
or Disability. Such liquidated damages total $600,000 if such termination occurs on or prior to January 11, 2022 or $375,000 if
such termination occurs after January 11, 2022 and prior to January 11, 2023.
There are no arrangements
or understandings between Mr. Sibley, Mr. Stephens and any other person pursuant to which each person was selected as an officer
of the Company. Mr. Sibley nor Mr Stephens has any family relationship with any director or executive officer of the Company or
any person nominated or chosen by the Company to be a director or executive officer.
The foregoing description of the Term Employment Agreements
are only summaries and each summary is qualified in its entirety by reference to the complete text of the Amendment, which are
filed as Exhibits 10.4 and 10.5 to this Current Report on Form 8-K and incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
On November 27, 2019, the Company issued
a press release announcing the purchase of the assets of Halcyon Thruput. A copy of the press release is attached hereto as Exhibit
99.1 and is incorporated herein by reference.
The information furnished pursuant to this
Item 7.01 and the accompanying Exhibit 99.1 shall not be deemed to be “filed” for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, the information in
this Item 7.01 and Exhibit 99.1(i) will not be deemed an admission as to the materiality of any information herein (including Exhibit
99.1) and (ii) is not to be incorporated by reference into any filings of the Company.
Item 9.01 Financial Statements and Exhibits.
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(a)
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Financial statements of businesses acquired.
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Financial statements as required for the
periods specified in Rule 8-04(b) of Regulation S-X, and meeting the requirements of Regulation S-X, are not
included in this Report. The Company will provide the required financial statements by amendment of this Current Report within
71 calendar days from the date on which this Current Report on Form 8-K is required to be filed.
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(b)
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Pro forma financial information.
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Pro forma financial information, if and
as required by Rule 8-05 of Regulation S-X, and meeting the requirements of Regulation S-X, are not included
in this Report. If pro forma financial information is required with respect to the transaction described above, the Company will
provide such required pro forma financial information by amendment of this Current Report within 71 calendar days from the date
on which this Current Report on Form 8-K is required to be filed.
Exhibit No.
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Description of Exhibit
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10.1
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First Amendment to Asset Purchase Agreement dated January 11, 2021, by and among, Generation Hemp, Inc., GENH Halcyon Acquisition, LLC, Oz Capital, LLC, OZC Agriculture KY LP, Halcyon Thruput, LLC, and the owners set forth therein.
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10.2
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Subordinated Promissory Note dated January 11, 2021, by GenH Halcyon Acquisition, LLC (the “Borrower”) and Halcyon Thruput, LLC
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10.3
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Guaranty Agreement, dated December 31, 2020, of Generation Hemp in favor of Coventry Asset Management.
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10.4
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Term Employment Agreement dated January 11, 2021, between Generation Hemp, Inc. and Jack Sibley
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10.5
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Term Employment Agreement dated January 11, 2021, between Generation Hemp, Inc. and Watt Stephens
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99.1
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Press Release.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, Generation Hemp, Inc. has duly caused this current report to be signed on its behalf by the undersigned hereunto duly
authorized.
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GENERATION HEMP, INC.
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Date: January 15, 2021
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By:
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/s/ Gary C. Evans
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Gary C. Evans
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Chief Executive Officer
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