UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of
Report (Date of earliest event reported): January 24,
2019
EXACTUS, INC.
(Exact
name of the registrant as specified in its charter)
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Nevada
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000-55828
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27-1085858
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(State or other
jurisdiction of incorporation)
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(Commission File
Number)
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(IRS Employer
Identification No.)
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4870 Sadler Road, Suite 300, Glen Allen, Virginia
23060
(Address
of principle executive offices) (Zip code)
Registrant’s
telephone number, including area code:
(804) 205-5036
______________________________________________________
(Former
name or 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):
[ ]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425).
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12).
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)).
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)).
Indicate
by check mark whether the registrant is an emerging growth company
as defined in as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
[ ]
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.
[
]
SECTION 1 – REGISTRANT’S BUSINESS AND
OPERATIONS
Item 1.01 Entry into a Material Definitive Agreement.
SECTION 3 – SECURITIES AND TRADING MARKETS
Item
3.02 Unregistered Sales of Equity
Securities.
As
previously reported in our Current Report on Form 8-K filed January
14, 2019, as amended on January 22, 2019 (the “Original
Report”), we previously entered into a Master Product
Development and Supply Agreement (the “Development
Agreement”) with Ceed2Med, LLC and a series of exchange
agreements with certain holders (each a “Holder”, and
collectively, the “Holders”) of our previously issued
convertible debentures and promissory notes (each a
“Note”, and collectively, the “Notes”). On
January 24, 2019, we entered into a series of additional exchange
agreements with Holders of Notes. We agreed with the Holders to
exchange all outstanding obligations under the Notes (including
original issue discount, premium that would be due on redemption,
principal, interest, default interest, penalties and costs) for an
amount of stated value of our Series A Convertible Preferred Stock
(the “Series A Preferred”) equal to the greater of the
amount due under the note if redeemed or the amount that was
required to be paid by the holders to acquire the notes from the
original purchasers thereof, including any premium payment. On
January 24, 2019, we closed on the exchange of the Notes for shares
of our Series A Preferred. Each of the exchanges was made in
reliance upon the exemption from registration provided by Section
3(a)(9) of the Securities Act or 1933, as amended (the
“Securities Act”).
On
January 24, 2019, we accepted subscriptions for $55,090 of Series A
Preferred. The offer and sale of shares of Series A Preferred was
made solely to accredited investors and without any general
solicitation or advertising. The sales of Series A Preferred to
subscribers was made at a purchase price of $1.00 per share and was
made in reliance upon the exemption from registration provided by
Rule 506(b) of Regulation D under the Securities Act. The proceeds
of the sale of Series A Preferred were primarily used to retire
obligations under Notes.
In
total, we retired Note obligations in the amount of $639,218.32
through a combination of exchanges of Series A Preferred for Notes
and use of proceeds from new Series A Preferred sales. We issued a
total of 641,589 shares of Series A Preferred, with 586,499 shares
being issued in exchange for outstanding Notes, and 55,090 shares
being issued for new subscriptions. The Series A Preferred
issuances made January 24, 2019 were in addition to the 46,840
shares of Series A previously issued in exchange for a $46,840 Note
obligation as reported in the Original Report.
Simultaneous
with the closing of the exchange described above, a former Holder
of Notes Auctus Fund, LLC, converted $4,000 out of $216,059.21 due
and owing under their Note at a conversion price of $0.002 per
share, and the balance due under the Note was sold to third parties
in arms-length transactions. Following the conversion and sale, the
balance unconverted under the Note was exchanged for Series A
Preferred in total stated amounts equal to the purchase prices paid
for the Note by each purchaser. The issuance to Auctus Fund, LLC
upon conversion was made in reliance upon the exemption from
registration provided by Rule 506(b) of Regulation D under the
Securities Act and the third party purchases of the balance
unconverted under the Note was made in reliance on the exemption
from registration provide by Rule 3(a)(9) under the Securities
Act.
As
previously reported in the Original Report, each share of Series A
Preferred has a stated value of $1.00 per share. In the
event of a liquidation, dissolution or winding up of the Company,
each share of Series A Preferred Stock will be entitled to a
payment as set forth in the Certificate of Designation. The Series
A Preferred is convertible into such number of shares of the
Company’s common stock, par value $0.0001 per share (the
“Common Stock”) equal to the Stated Value as defined in
the Certificate of Designation, divided by $0.025 per share. The
Company is prohibited from effecting the conversion of the Series A
Preferred Stock to the extent that, as a result of such conversion,
the holder would beneficially own more than 4.99%, in the
aggregate, of the issued and outstanding shares of the
Company’s common stock calculated immediately after giving
effect to the issuance of shares of common stock upon the
conversion of the Series A Preferred Stock (the “Beneficial
Ownership Limitation”). The Beneficial Ownership Limitation
may be increased by the holder up to, but not exceeding,
9.99%. Each share of Series A Preferred Stock entitles the
holder to vote on all matters voted on by holders of common stock.
With respect to any such vote, each share of Series A Preferred
Stock entitles the holder to cast such number of votes equal to the
number of shares of common stock such shares of Series A Preferred
Stock are convertible into at such time, but not in excess of the
Beneficial Ownership Limitation.
Section 9 – FINANCIAL STATEMENTS AND EXHIBITS
Item
9.01
Financial
Statements and Exhibits
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Exhibit No.
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Description
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Certificate
of Designation for Series A Convertible Preferred Stock
(1)
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Form of
Exchange Agreement for Series A Preferred Stock
(1)
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Form of
Subscription Agreement for Series A Preferred Stock*
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(1)
Incorporated by reference to
Current Report on Form 8-K filed January 8,
2019
* Filed herewith
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on behalf of the
undersigned hereunto duly authorized.
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EXACTUS,
INC.
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January 29,
2019
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By:
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/s/ Philip J.
Young
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Philip J.
Young
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President and Chief
Executive Officer
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Exhibit
10.2
SUBSCRIPTION AGREEMENT
EXACTUS, INC.
Exactus,
Inc., a Nevada corporation (hereinafter the "Company") and the
undersigned (hereinafter the “Subscriber”) agree as
follows:
WHEREAS:
A. The
Company desires to issue a maximum of __________ shares of Series A
Preferred Stock of the Company, par value $0.0001 per share, at a
price of $1.00 per share ($__________); and
B.
Subscriber desires to acquire that number of shares as is set forth
on the signature page hereof (hereinafter the "Shares") at the
purchase price set forth herein.
NOW, THEREFORE,
for and in consideration of the premises and
the mutual covenants hereinafter set-forth, the parties hereto do
hereby agree as follows:
SUBSCRIPTION
1.1
Subject to the
terms and conditions hereinafter set forth, the Subscriber hereby
subscribes for and agrees to purchase the Shares from the Company
at a price equal to $1.00 per share, and the Company agrees to sell
the Shares to Subscriber in consideration of said purchase price.
Upon execution, this subscription shall be irrevocable by
Subscriber.
1.2
The purchase price
for the Shares subscribed to hereunder is payable by the Subscriber
contemporaneously with the execution and e-mail delivery of this
Subscription Agreement to the Company at
tryan@exactusinc.com
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Payment shall be made by wire transfer of the purchase price in the
amount of $1.00 per Share to the Company’s escrow agent as
follows:
Routing
number:
121000248
Bank:
Wells
Fargo Bank, N.A.
Account number:
2967194461
Account name: Laxague Law, Inc.,
Escrow Account
1
East Liberty, Suite 600
REPRESENTATIONS AND WARRANTIES BY SUBSCRIBER
2.1
Subscriber hereby
acknowledges, represents and warrants to the Company the
following:
(A)
Subscriber
acknowledges that the purchase of the Shares involves a high degree
of risk and that the Company may require substantial additional
funds;
(B)
Subscriber
recognizes that an investment in the Company is highly speculative
and only investors who can afford the loss of their entire
investment should consider investing in the Company and the
Shares;
(C)
Subscriber has such
knowledge and experience in finance, securities, investments,
including investment in unregistered securities, and other business
matters so as to be able to protect its interests in connection
with this transaction;
(D)
Unless allowed to
participated in this offering as a non-accredited investor by
permission of the Board of Directors of the Company, the Subscriber
is an "Accredited Investor" as defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as
amended;
(E)
Subscriber
acknowledges that the shares are subject to significant
restrictions on transfer as imposed by state and federal securities
laws, including but not limited to a minimum holding period of at
least six (6) months;
(F)
Subscriber hereby
acknowledges (i) that this offering of Shares has not been reviewed
by the United States Securities and Exchange Commission ("SEC") or
by the securities regulator of any state; (ii) that the Shares are
being issued by the Company pursuant to an exemption from
registration provided by Section 4(2) of the Securities Act of
1933; and (iii) that any certificate evidencing the Shares received
by Subscriber will bear a legend in substantially the following
form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS.
WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER UNLESS IN THE OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY REGISTRATION IS NOT REQUIRED
FOR SUCH TRANSFER AND THAT SUCH TRANSFER WILL NOT BE IN VIOLATION
OF THE APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
(G)
Subscriber is
acquiring the Shares as principal for Subscriber's own
benefit;
(H)
Subscriber is not
aware of any advertisement of the Shares or any general
solicitation in connection with any offering of the
Shares;
(I)
Subscriber
acknowledges receipt and review of the Company’s filings with
the Securities and Exchange Commission, and of both the Articles of
Incorporation and bylaws of the Company, together with the
opportunity and the Company’s encouragement to seek the
advice and consultation of independent investment, legal and tax
counsel;
(J)
Subscriber
acknowledges and agrees that the Company has previously made
available to Subscriber the opportunity to ask questions of and to
receive answers from representatives of the Company concerning the
Company and the Shares, as well as to conduct whatever due
diligence the Subscriber, in its discretion, deems advisable.
Subscriber is not relying on any information communicated by any
representatives of the Company and is relying solely upon
information obtained during Subscriber’s due diligence
investigation in making a decision to invest in the Shares and the
Company.
REPRESENTATIONS BY THE COMPANY
3.1
The Company
represents and warrants to the Subscriber that:
(A)
The Company is a
corporation duly organized, existing and in good standing under the
laws of the State of Nevada and has the corporate power to conduct
the business which it conducts and proposes to
conduct.
(B)
Upon issue, the
Shares will be duly and validly issued, fully paid and
non-assessable preferred stock in the capital of the
Company.
TERMS
OF SUBSCRIPTION
4.1
Upon acceptance of
this subscription by the Company, all funds paid hereunder shall be
immediately available to the Company for its use.
4.2
Subscriber hereby
authorizes and directs the Company to deliver the securities to be
issued to such Subscriber pursuant to this Subscription Agreement
to Subscriber’s address indicated herein.
4.3
Notwithstanding the
place where this Subscription Agreement may be executed by any of
the parties hereto, the parties expressly agree that all the terms
and provisions hereof shall be construed in accordance with and
governed by the laws of the State of Nevada. Exclusive venue for
any dispute arising out of this Subscription Agreement or the
Shares shall be the state or federal courts sited in Washoe County,
Nevada.
4.4
The parties agree
to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of
this Subscription Agreement.
[remainder of this page intentionally blank, signature page to
follow]
ACCREDITED INVESTOR STATUS
5.1
☐
By checking this box, Subscriber represents
and warrants to the Company that the Subscriber is an "Accredited
Investor" as such term is defined in Rule 501 of Regulation D
promulgated under the United States Securities Act of 1933, as
amended (the "Act"). The Subscriber acknowledges having reviewed
and considered the definition of “Accredited Investor”
attached to this Subscription Agreement.
IN WITNESS WHEREOF,
this Subscription Agreement is executed
as of the _____ day of January, 2019.
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Number
of Shares Subscribed For:
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Total
Purchase Price:
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Signature of
Subscriber:
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Name of
Subscriber:
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Address
of Subscriber:
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Subscriber’s
SS# or tax ID#:
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ACCEPTED BY: EXACTUS, INC.
Signature of
Authorized Signatory:
___________________________
Name of Authorized
Signatory: _________________________
Date of
Acceptance: ____________________________
Accredited Investor Definition
The
Subscriber will be an "Accredited Investor" as such term is defined
in Rule 501 of Regulation D promulgated under the United States
Securities Act of 1933, as amended (the "Act") if the Subscriber is
any of the following:
(1) Any
bank as defined in section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in section
3(a)(5)(A) of the Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section 15 of
the Securities Exchange Act of 1934; any insurance company as
defined in section 2(a)(13) of the Act; any investment company
registered under the Investment Company Act of 1940 or a business
development company as defined in section 2(a)(48) of that Act; any
Small Business Investment Company licensed by the U.S. Small
Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess
of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment
decision is made by a plan fiduciary, as defined in section 3(21)
of such act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or,
if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;
(2) Any
private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any
organization described in section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of
$5,000,000;
(4) Any
director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that
issuer;
(5) Any
natural person whose individual net worth, or joint net worth with
that person's spouse, exceeds $1,000,000.
(i)
Except as provided in paragraph (a)(5)(ii) of this section, for
purposes of calculating net worth under this paragraph
(a)(5):
(A) The
person's primary residence shall not be included as an
asset;
(B)
Indebtedness that is secured by the person's primary residence, up
to the estimated fair market value of the primary residence at the
time of the sale of securities, shall not be included as a
liability (except that if the amount of such indebtedness
outstanding at the time of sale of securities exceeds the amount
outstanding 60 days before such time, other than as a result of the
acquisition of the primary residence, the amount of such excess
shall be included as a liability); and
(C)
Indebtedness that is secured by the person's primary residence in
excess of the estimated fair market value of the primary residence
at the time of the sale of securities shall be included as a
liability;
(ii)
Paragraph (a)(5)(i) of this section will not apply to any
calculation of a person's net worth made in connection with a
purchase of securities in accordance with a right to purchase such
securities, provided that:
(A)
Such right was held by the person on July 20, 2010;
(B) The
person qualified as an accredited investor on the basis of net
worth at the time the person acquired such right; and
(C) The
person held securities of the same issuer, other than such right,
on July 20, 2010.
(6) Any
natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in
the current year;
(7) Any
trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in
§230.506(b)(2)(ii); and
(8) Any
entity in which all of the equity owners are accredited
investors.