The sale of Marijuana.com for $4.2 Million got a lot of attention a couple of months ago.
The sale was originally covered by TechCrunch.com and looked like an all cash sale for $4.2 Million.
Now George Kirikos who dug through some SEC filings has found that the purchase price which was reported as $4.2 million is really $4.25 Million, but the purchase price was not paid in cash.
The down payment was only $125,000
The balance is payable under a promissory note for $4,125,000.
The promissory note calls for 69 payments of 60,658.55 each starting on January 18, 2012.
The note in non-recourse so the Buyer have no personal liability to pay the note, and the only collateral is the domain itself.
The domain name will be held in escrow pending receipt of the payments which are spread out over almost 7 years.
The note appears below
In addition to the note, the Buyer has to pay the seller ten percent (10%) of the gross revenue generated by the Domain Name until such time as the Note is paid in full.
Also the Seller get to put up 2 banner ads on the domain until it is paid in full.
So if the Buyer pays the note in full the total consideration could wind up much higher than the $4.25 Million, however if the Buyer fails to make a payment under the note then the domain will transfer back to the Seller, making it more like a lease than a sale.
Here is a copy of the actual filing:
“”””
Seller hereby agrees to sell, and Purchaser hereby agrees to purchase, the Domain Name.
A.
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on the Closing Date, Purchaser shall pay to Seller, or its assigns, the sum of One Hundred Twenty Five Thousand Dollars ($125,000.00) by wire transfer;
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B.
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on the Closing Date, Purchaser shall execute a Non-Recourse Secured Promissory Note (the “Note”) in favor of Seller, or its assigns, in the principal amount of Four Million One Hundred Twenty Five Thousand Dollars ($4,125,000.00), in form and substance substantially as set forth in Exhibit A attached hereto.
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If to Seller:
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Global Life Enhancements, Inc.
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615 Pineview Drive
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Galloway, NJ 08205
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Attn: Brian Petruzzi/Jennifer Petruzzi
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Facsimile: (609) 652-4005
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If to Purchaser:
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WeedMaps Media, Inc.
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1300 Dove Street, Suite 100
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Newport Beach, CA 92660
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Attn: President
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Facsimile: (949) 515-1625
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with a copy to:
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9900 Research Drive
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Irvine, CA 92618
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Attn: Brian A. Lebrecht, Esq.
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Facsimile: (949) 635-1244
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$4,125,000.00
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November 18, 2011
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Newport Beach, CA
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“Payor”
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||
WeedMaps Media, Inc.,
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a Nevada corporation
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/s/ James Pakulis
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By:
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James Pakulis
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Its:
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President
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Acknowledged:
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Global Life Enhancements, Inc.
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/s/ Brian Petruzzi
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By:
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Brian Petruzzi
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Its:
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President
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Period
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Principal
Balance
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Interest
|
Principal
Payment
|
Total
Payment
|
||||
1
|
4,125,000.00
|
(1,718.75)
|
(58,939.80)
|
(60,658.55)
|
||||
2
|
4,066,060.20
|
(1,694.19)
|
(58,964.36)
|
(60,658.55)
|
||||
3
|
4,007,095.83
|
(1,669.62)
|
(58,988.93)
|
(60,658.55)
|
||||
4
|
3,948,106.90
|
(1,645.04)
|
(59,013.51)
|
(60,658.55)
|
||||
5
|
3,889,093.39
|
(1,620.46)
|
(59,038.10)
|
(60,658.55)
|
||||
6
|
3,830,055.29
|
(1,595.86)
|
(59,062.70)
|
(60,658.55)
|
||||
7
|
3,770,992.59
|
(1,571.25)
|
(59,087.31)
|
(60,658.55)
|
||||
8
|
3,711,905.29
|
(1,546.63)
|
(59,111.93)
|
(60,658.55)
|
||||
9
|
3,652,793.36
|
(1,522.00)
|
(59,136.56)
|
(60,658.55)
|
||||
10
|
3,593,656.80
|
(1,497.36)
|
(59,161.20)
|
(60,658.55)
|
||||
11
|
3,534,495.61
|
(1,472.71)
|
(59,185.85)
|
(60,658.55)
|
||||
12
|
3,475,309.76
|
(1,448.05)
|
(59,210.51)
|
(60,658.55)
|
||||
13
|
3,416,099.25
|
(1,423.37)
|
(59,235.18)
|
(60,658.55)
|
||||
14
|
3,356,864.07
|
(1,398.69)
|
(59,259.86)
|
(60,658.55)
|
||||
15
|
3,297,604.21
|
(1,374.00)
|
(59,284.55)
|
(60,658.55)
|
||||
16
|
3,238,319.65
|
(1,349.30)
|
(59,309.25)
|
(60,658.55)
|
||||
17
|
3,179,010.40
|
(1,324.59)
|
(59,333.97)
|
(60,658.55)
|
||||
18
|
3,119,676.43
|
(1,299.87)
|
(59,358.69)
|
(60,658.55)
|
||||
19
|
3,060,317.74
|
(1,275.13)
|
(59,383.42)
|
(60,658.55)
|
||||
20
|
3,000,934.32
|
(1,250.39)
|
(59,408.17)
|
(60,658.55)
|
||||
21
|
2,941,526.16
|
(1,225.64)
|
(59,432.92)
|
(60,658.55)
|
||||
22
|
2,882,093.24
|
(1,200.87)
|
(59,457.68)
|
(60,658.55)
|
23
|
2,822,635.56
|
(1,176.10)
|
(59,482.46)
|
(60,658.55)
|
||||
24
|
2,763,153.10
|
(1,151.31)
|
(59,507.24)
|
(60,658.55)
|
||||
25
|
2,703,645.86
|
(1,126.52)
|
(59,532.04)
|
(60,658.55)
|
||||
26
|
2,644,113.82
|
(1,101.71)
|
(59,556.84)
|
(60,658.55)
|
||||
27
|
2,584,556.98
|
(1,076.90)
|
(59,581.66)
|
(60,658.55)
|
||||
28
|
2,524,975.33
|
(1,052.07)
|
(59,606.48)
|
(60,658.55)
|
||||
29
|
2,465,368.85
|
(1,027.24)
|
(59,631.32)
|
(60,658.55)
|
||||
30
|
2,405,737.53
|
(1,002.39)
|
(59,656.16)
|
(60,658.55)
|
||||
31
|
2,346,081.37
|
(977.53)
|
(59,681.02)
|
(60,658.55)
|
||||
32
|
2,286,400.34
|
(952.67)
|
(59,705.89)
|
(60,658.55)
|
||||
33
|
2,226,694.46
|
(927.79)
|
(59,730.77)
|
(60,658.55)
|
||||
34
|
2,166,963.69
|
(902.90)
|
(59,755.65)
|
(60,658.55)
|
||||
35
|
2,107,208.04
|
(878.00)
|
(59,780.55)
|
(60,658.55)
|
||||
36
|
2,047,427.49
|
(853.09)
|
(59,805.46)
|
(60,658.55)
|
||||
37
|
1,987,622.03
|
(828.18)
|
(59,830.38)
|
(60,658.55)
|
||||
38
|
1,927,791.65
|
(803.25)
|
(59,855.31)
|
(60,658.55)
|
||||
39
|
1,867,936.34
|
(778.31)
|
(59,880.25)
|
(60,658.55)
|
||||
40
|
1,808,056.09
|
(753.36)
|
(59,905.20)
|
(60,658.55)
|
||||
41
|
1,748,150.90
|
(728.40)
|
(59,930.16)
|
(60,658.55)
|
||||
42
|
1,688,220.74
|
(703.43)
|
(59,955.13)
|
(60,658.55)
|
||||
43
|
1,628,265.61
|
(678.44)
|
(59,980.11)
|
(60,658.55)
|
||||
44
|
1,568,285.50
|
(653.45)
|
(60,005.10)
|
(60,658.55)
|
||||
45
|
1,508,280.40
|
(628.45)
|
(60,030.10)
|
(60,658.55)
|
||||
46
|
1,448,250.29
|
(603.44)
|
(60,055.12)
|
(60,658.55)
|
47
|
1,388,195.17
|
(578.41)
|
(60,080.14)
|
(60,658.55)
|
||||
48
|
1,328,115.03
|
(553.38)
|
(60,105.17)
|
(60,658.55)
|
||||
49
|
1,268,009.86
|
(528.34)
|
(60,130.22)
|
(60,658.55)
|
||||
50
|
1,207,879.64
|
(503.28)
|
(60,155.27)
|
(60,658.55)
|
||||
51
|
1,147,724.37
|
(478.22)
|
(60,180.34)
|
(60,658.55)
|
||||
52
|
1,087,544.04
|
(453.14)
|
(60,205.41)
|
(60,658.55)
|
||||
53
|
1,027,338.63
|
(428.06)
|
(60,230.50)
|
(60,658.55)
|
||||
54
|
967,108.13
|
(402.96)
|
(60,255.59)
|
(60,658.55)
|
||||
55
|
906,852.54
|
(377.86)
|
(60,280.70)
|
(60,658.55)
|
||||
56
|
846,571.84
|
(352.74)
|
(60,305.82)
|
(60,658.55)
|
||||
57
|
786,266.02
|
(327.61)
|
(60,330.94)
|
(60,658.55)
|
||||
58
|
725,935.08
|
(302.47)
|
(60,356.08)
|
(60,658.55)
|
||||
59
|
665,579.00
|
(277.32)
|
(60,381.23)
|
(60,658.55)
|
||||
60
|
605,197.77
|
(252.17)
|
(60,406.39)
|
(60,658.55)
|
||||
61
|
544,791.38
|
(227.00)
|
(60,431.56)
|
(60,658.55)
|
||||
62
|
484,359.82
|
(201.82)
|
(60,456.74)
|
(60,658.55)
|
||||
63
|
423,903.08
|
(176.63)
|
(60,481.93)
|
(60,658.55)
|
||||
64
|
363,421.15
|
(151.43)
|
(60,507.13)
|
(60,658.55)
|
||||
65
|
302,914.02
|
(126.21)
|
(60,532.34)
|
(60,658.55)
|
||||
66
|
242,381.68
|
(100.99)
|
(60,557.56)
|
(60,658.55)
|
||||
67
|
181,824.12
|
(75.76)
|
(60,582.79)
|
(60,658.55)
|
||||
68
|
121,241.33
|
(50.52)
|
(60,608.04)
|
(60,658.55)
|
||||
69
|
60,633.29
|
(25.26)
|
(60,633.29)
|
(60,658.55)
|
||||
Samit Madan says
Still a pretty good deal for the seller, “can’t lose” scenario.
$4.25mm over 7 years is still $4.25mm.
Add to that 10% of revenue + 2 banner ads, all upside in my book.
Happy New Year MHB,
and to all readers of this fine blog too!
Kevin says
Nice and smart deal structure!
George Kirikos says
If you look at the balance sheet of the buyer (General Cannabis) in Google Finance (“CANA” on the Pink Sheets), they don’t have much cash on hand, even though their market cap is over $100 million, so it makes sense that it’s not a 100% cash deal.
It’ll be interesting to see if they pay it off in full. 6 years is a long time!
Jonathan says
Thank you 4 the insight into the legals.
DomainReport.ca says
Not an unusual payment method for a big value deal. Happens a lot in real estate and business sales.
craig says
Can dopers spell?
N says
Anyone wanna bet they’ll never realise the full 4.2M?
DR.VEGAS says
@N
Maybe not…but then they get the domain back to let someone give it a try.
All upside for the seller.Congrats.
Jp says
Looks like a very secure and smart deal to me. Everybody wins. Nobody ever wants to self finance a deal but this structure makes sense for self financing.
MPC says
Was the person who drafted this stoned?
Purchaser is not defined anywhere in the agreement. Buyer is defined. But Purchaser is the one making payments.
Nice work.
Jim says
Looking at Sedo could’ve gotten Marijuana.tel cheaper !
massvocals says
please advise can we do this in Massachusetts can you send web agreement / and what federal restriction are you facing < please advise
JJ says
My note on the originl post..
“Things don’t add up with this report.”
People are quick to believe stuff because they want to believe stuff. Reality is, many competing interests will take full advantage of naivity.
2Pot.us says
They can use 2POT.US (2POTUS / aka Pres of US) to petition the Feds to lay off interference with States’ legalized medicinal marijuna programs
Hint 😉
Rahul says
Its surprising to know that domains are really sold at such price.
Well..nice explained with structure.
lavixir says
There comes a point in every blogger’s life when, despite their best efforts, they find themselves scraping the bottom of the barrel. Maybe it’s the heat in the dead of summer, the fact that everyone is on vacation while you toil away at the old keyboard, or just a bit of old-fashioned
dual shaper says
I’m not sure how decent the conversion rates are because the ad itself is too short to sell the benefits of subscribing IMO but it would be interesting to see what effect the subscribe thing has on the ad’s CTR.
bioserr says
There comes a point in every blogger’s life when, despite their best efforts, they find themselves scraping the bottom of the barrel. Maybe it’s the heat in the dead of summer, the fact that everyone is on vacation while you toil away at the old keyboard, or just a bit of old-fashioned
bellomare says
There comes a point in every blogger’s life when, despite their best efforts, they find themselves scraping the bottom of the barrel. Maybe it’s the heat in the dead of summer, the fact that everyone is on vacation while you toil away at the old keyboard, or just a bit of old-fashioned
domain guy says
less than 3% down with no additional collaterial and no recourse
and stupid domainers call this a good deal?ever try to get a loan on these terms?the seller is an idiot no stock oprions with a public company based on the upside? if rick was blogging he would call this the stupidest domain sale of the yr..this would be one of the emails ricks didn’t respond to..its that simple.
when someone uses your lead generation for sales…you profit.
Russ says
Just incase they can’t spell Marijuana.com YOU CAN ALWAYS PURCHAS Pot.com From Me Nice Built in Traffic and I will sell it for 3.4 Million Dollars with only 150 Thousand Down and 69 payments of 47,101.45 a month. Same agreement as above only with NO INTEREST !!!!
How’s That for a deal!
P.S Just the Domain name no website content.
Remember Pot is a BRAND and it has built in Traffic! That’s what you want to start your business!
A brand that is already in there head and easy to Spell.
You can contact me at Russ@VideoGuy.com
.
Bill says
@ Russ- LMFAO!
aapl says
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