Item 1.01 Entry Into a Material Definitive Agreement.
OnJuly 22, 2021 (the "Closing"), cbdMD, Inc., aNorth Carolina corporation (the "Company"); TwentyTwo Capital, LLC , aNorth Carolina limited liability company ("Twenty Two");Vieo Design, LLC , aTennessee limited liability company ("Vieo") (Twenty Two and Vieo, collectively, "Seller"); John J. Wiesehan III; andBradley D. Trawick entered into an Asset Purchase Agreement (the "Asset Purchase Agreement"). Under the Asset Purchase Agreement, the Company acquired from the Seller the CBD online marketplace, DirectCBDOnline.com, related trademarks, inventory, certain other assets, and assumed certain liabilities. The DirectCBDOnline.com website provides CBD education and information and a selection of the highest-quality CBD products, including, but not limited to, oils, tinctures, salves, capsules, and gummies. The Company acquired the assets for the consideration of$2,000,000 and up to 600,000 shares of the Company's restricted common stock. At the Closing, the$200,000 of the cash purchase price was deposited into escrow pending possible post-Closing adjustments and indemnity provisions. At the Closing, the Company issued Twenty Two 300,000 shares of the Company's common stock and 100,000 shares of the Company's Common Stock shall be issued to Twenty Two on or beforeJanuary 31, 2023 , less any amounts setoff against such shares for indemnification claims pending against or paid by the Company under the Asset Purchase Agreement and the remaining 200,000 shares shall be issued to Twenty Two on or before 60th day following the first year anniversary of the Closing subject to certain earn out provisions provided under the Asset Purchase Agreement. The shares are subject to a 180 day lock up agreement subject to certain limited transfers which will also be subject to the lock up. Twenty Two is an accredited or otherwise sophisticated investor and the issuance of the shares of common stock was exempt from registration under the Securities Act of 1933, as amended, in reliance on the exemption from registration provided by Section 4(a)(2) of the act.
The foregoing description of the terms and conditions of the Asset Purchase Agreement is qualified in its entirety by references to such agreement which is filed as Exhibit 10.1 to this report.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. OnJuly 22, 2021 , pursuant to the Closing of the Asset Purchase Agreement Mr.John J. Wiesehan III was appointed Chief Revenue Officer of the Company.Mr. Wiesehan provided consulting services to the Company fromJune 2021 through the Closing.Mr. Wiesehan , age 37, founded Twenty Two in 2018 and has served as its chief executive officer since its inception. FromSeptember 2012 toOctober 2017 he served as vice president of sales forBallantyne Brands LLC , a manufacturer of ENDS (non combustible tobacco) products. He is a graduate ofAppalachian State University . The Company andMr. Wiesehan entered into a two year employment agreement effective on the Closing. Under the terms of the employment agreement, the Company agreed to pay him an initial annual base salary of$180,000 and he is entitled to a discretionary bonus up to 40% of his base salary at the sole determination of the Compensation Committee of the Company's board of directors. He will also be eligible for a one time cash performance bonus of$160,000 payable in cash upon the Company reporting total net sales (as defined under the employment agreement) equal or exceeding$16,000,000 for any fiscal quarterly period prior toSeptember 30, 2022 . In addition, he is entitled to participate in benefit programs the Company offers its employees and paid vacation. The employment agreement may be terminated by the Company in the event of his death or disability, by the Company for cause (as defined in the employment agreement), or by either party without cause. The agreement contains customary confidentiality, non-compete, and indemnification provisions. The description of the terms of the employment agreement is qualified in its entirety by reference to the agreement which is filed as Exhibit 10.2 to this report.
Item 7.01 Regulation FD Disclosure.
OnJuly 22, 2021 , the Company issued a press release announcing the completion of the DirectCBDOnline.com assets from the Seller. A copy of this press release is furnished as Exhibit 99.1 to this report. Pursuant to General Instruction B.2 of Form 8-K, the information in this Item 7.01 of Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise be subject to the liabilities of that section, nor is it incorporated by reference into any filing of cbdMD, Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Filed or Furnished Incorporated by Reference Herewith No. Exhibit Description Form Date Filed Number 10.1 Asset Purchase Agreement by and among Filed Twenty Two Capital, LLC, cbdMD, Inc., John J. Wiesehan III, Vieo Design, LLC and Bradley D. Trawick dated July 22, 2021. 10.2 Employment Agreement between the Company Filed and John Wiesehan III dated July 22, 2021 99.1 Press release dated July 22, 2021 Furnished
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