Attached files
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
Date of report (Date of earliest event reported): August 14,
2017
EXACTUS, INC.
(Exact Name of Registrant as Specified in 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 Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (804)
205-5036
N/A
(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):
☐
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 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.
☐
Item
1.01.
Entry
into a Material Definitive Agreement
On
August 14, 2017, Exactus, Inc. (the “Company”) entered
into a Securities Purchase Agreement (the “Securities
Purchase Agreement”) under which it agreed to sell an 8%
convertible promissory note in an aggregate principal amount of
$110,000.00 (the “Note”) to Morningview Financial, LLC
(the “Purchaser”). The net proceeds of the sale of the
Note, after deducting the Purchaser’s discount and the
expenses payable by the Company, were $87,000. As discussed in more
detail below, the Securities Purchase Agreement also provides for
the issuance by the Company of up to an additional $55,000
aggregate principal amount of 8% convertible notes to the
Purchaser, with terms substantially similar to the Note (the
“Additional Notes,” and, together with the Note, the
“Notes”). The net proceeds of the sale of the Notes,
after deducting the Purchaser’s discount and the estimated
expenses payable by the Company, are expected to be approximately
$46,000.
The
closing of the sale of the Note occurred on August 22, 2017. The
Notes and the shares of the Company’s common stock issuable
upon conversion of the Notes have not been, or, except as discussed
below, will not be, registered under the Securities Act of 1933, as
amended (the “Securities Act”). The Company offered and
sold the Note, and will sell the Additional Notes, to the Purchaser
in reliance on the exemption from registration provided by Section
4(a)(2) of the Securities Act. As discussed below, the Company
intends to register (i) the shares of the Company’s common
stock issuable upon conversion of the Note and (ii) $27,500
aggregate principal amount of the Additional Notes for resale by
the Purchaser under the Securities Act.
The
Note is dated August 14, 2017 and provides the terms and conditions
of the Company’s obligations to the Purchaser. The Note will
bear interest at a rate of 8% per annum and will mature on August
14, 2018.
At any
time after the 170th calendar day after
the issue date of the Note, the Purchaser has the option to convert
all or any part of the outstanding and unpaid principal amount and
accrued and unpaid interest of the Notes into shares of the
Company’s common stock at the Conversion Price. The
“Conversion Price” will be the lesser of (i) $0.25 and
(ii) 60% of the average of the three lowest trading prices of the
Company’s common stock during the twenty-day trading period
prior to the conversion. The Conversion Price is subject to further
reduction upon certain events specified in the Notes.
The
following are events of default under the Notes that may result in
the outstanding Notes becoming immediately due and payable in an
amount equal to 150% (or in certain cases 200%) of the outstanding
balance of the Notes (including principal and accrued and unpaid
interest) plus default interest at a rate of 18% per
annum:
● the Company fails
to pay the principal or interest due on the Notes, whether at
maturity, upon acceleration or otherwise, and the failure continues
for a period of 10 days;
● the Company fails
to satisfy its obligations relating to the conversion of the Notes
into shares of the Company’s common stock, and the failure
continues for a period of 2 business days;
● the Company
breaches any material covenant or other material provision of the
Notes, and the breach continues for a period of 10
days;
● any representation
or warranty of the Company made in the Notes or in any related
transaction document is false or misleading in any material respect
when made and such breach results in a material adverse effect on
the rights of the Purchaser with respect to the Notes;
● the Company or any
subsidiary of the Company makes an assignment for the benefit of
creditors or applies for, or consents to, the appointment of a
receiver or trustee;
● any money judgment,
writ or similar process is entered against the Company, any
subsidiary of the Company, or any of its property or other assets
for more than $50,000, and remains unvacated, unbonded or unsayed
for a period of 20 days;
● bankruptcy,
insolvency, reorganization or liquidation proceedings or other
similar proceedings, voluntary or involuntary, are instituted
against the Company or any subsidiary of the Company;
● the Company fails
to maintain the listing or quotation of its common
stock;
● the Company fails
to comply with the reporting requirements of the Securities
Exchange Act of 1934 (the “Exchange Act”) or the
Company ceases to be subject to the reporting requirements of the
Exchange Act;
● the dissolution,
liquidation, or winding up of the Company or any substantial
portion of its business;
● the Company ceases
its operations or admits it is otherwise unable to pay its debts as
they become due;
● the Company
replaces its auditor or restates any of the Company’s
financial statements for any period within the two years prior to
the issue date of the Notes;
● certain events
relating to the Company replacing its transfer agent;
● the Company
breaches or defaults under any covenant or other term or other
condition contained in any other financial instrument issued by the
Company;
● the Company
attempts to provide the Purchaser with material non-public
information regarding the Company;
● the Company’s
common stock fails to maintain a trading price in its principal
trading market of at least $0.0001;
● the Company fails
to repay the Notes, in their entirety, after the completion of its
next completed offering of $750,000 or more; and
● the Company fails
to file a registration statement relating to the common stock of
the Company into which the Note is convertible within 30 days of
the issue date of the Note or to cause the registration statement
to go effective within 120 days of the issue date of the
Note.
The
Company has the right to prepay the Notes at any time until the
170th
calendar day after the issue date of the Note, in an amount equal
to 135% of the principal amount of the Notes outstanding. The
Company may not prepay the Notes after the 170th calendar day after
the issue date of the Note. The Company will be subject to a
liquidated damages charge of 25% of the outstanding principal
amount of the Notes if it effects certain exchange transactions in
accordance with, based upon or related or pursuant to Section
3(a)(10) of the Securities Act or if the Company effects a reverse
stock split with respect to shares of its common stock. In
addition, the Notes grant the Purchaser a right of first refusal
with respect to potential future financing offered to the Company
by third parties and the right to become a party to any future
transaction document related to a security issuance by the Company
to a third party with terms more favorable to the third party than
the terms of the Notes.
Any
amounts due and payable to the Purchaser under the terms of the
Notes, including any payment on an event of default, default
interest, or agreed upon liquidated damages may, at the
Purchaser’s option, be converted into shares of common stock
of the Company at the Conversion Price.
The
Securities Purchase Agreement also provides that, in connection
with the registration of the common stock of the Company into which
the Note is convertible, the Company will issue an additional
$55,000 aggregate principal amount of Additional Notes. Upon the
Company’s filing of a registration statement regarding the
common stock of the Company into which the Notes are convertible,
the Company will issue $27,500 aggregate principal amount of
Additional Notes to the Purchaser, which will have the same terms
and conditions of the Note and will be given the same registration
rights as the Note. Upon the effectiveness of the Company’s
registration statement relating to the common stock of the Company
into which the Note is convertible, the Company will issue an
additional $27,500 aggregate principal amount of Additional Notes
to the Purchaser, which will have the same terms and conditions of
the Note, except such Additional Notes will not have registration
rights.
In
connection with the sale of the Note, the Company entered into a
Registration Rights Agreement, dated as of August 14, 2017, between
the Company and the Purchaser (the “Registration Rights
Agreement”). Under the Registration Rights Agreement, the
Company has agreed to file a registration statement on Form S-1
with the Securities and Exchange Commission covering resales of the
shares of the Company’s common stock issuable upon conversion
of the Note and the first $27,500 aggregate principal amount of the
Additional Notes. The Registration Rights Agreement requires the
Company to file the registration statement within 30 days of the
issue date of the Note and to cause the registration statement to
become effective within 120 days of the issue date of the Note. If
the Company fails to comply with these obligations, it will
constitute an event of default under the Note, as discussed
above.
The
Notes and the underlying common stock issuable upon conversion of
the Notes have not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from
registration requirements. This report on Form 8-K does not
constitute an offer to sell, or a solicitation of an offer to buy,
any security and shall not constitute an offer, solicitation or
sale in any jurisdiction in which such offering would be
unlawful.
The
foregoing description of the Securities Purchase Agreement, the
Notes, and the Registration Rights Agreement is a summary and is
qualified in its entirety by reference to the full Securities
Purchase Agreement, Note and Registration Rights Agreement, which
are attached as Exhibits 10.1, 10.2, and 10.3, respectively, to
this Current Report on Form 8-K and incorporated herein by
reference.
Item
2.03
Creation
of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
On
August 14, 2017, the Company agreed to issue a $110,000 aggregate
principal amount Note in a private placement pursuant to exemptions
from the registration requirements of the Securities Act. The sale
of the Note closed on August 22, 2017. In addition, pursuant to the
Securities Purchase Agreement, the Company has agreed to sell an
aggregate principal amount of $55,000 of Additional Notes to the
Purchaser, subject to the conditions specified in the Securities
Purchase Agreement.
The
information provided in Item 1.01 is incorporated herein by
reference.
Item
3.02.
Unregistered
Sales of Equity Securities.
On
August 14, 2017, the Company agreed to sell a $110,000 aggregate
principal amount Note in a private placement pursuant to exemptions
from the registration requirements of the Securities Act. The sale
of the Note closed on August 22, 2017. The Note will be convertible
into shares of the Company’s common stock at the Conversion
Price described above. In addition, pursuant to the Securities
Purchase Agreement, the Company has agreed to sell an aggregate
principal amount of $55,000 of Additional Notes to the Purchaser,
subject to the conditions specified in the Securities Purchase
Agreement. The Additional Notes will be convertible into shares of
the Company’s common stock at the Conversion Price described
above.
The information provided in Item 1.01 is incorporated herein
by reference.
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits
Exhibit
No. Description
Securities
Purchase Agreement, dated August 14, 2017, between Exactus, Inc.
and Morningview Financial, LLC
Convertible
Promissory Note, dated August 14, 2017
Registration
Rights Agreement, dated August 14, 2017, between Exactus, Inc. and
Morningview Financial, LLC
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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Exactus,
Inc.
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Date:
August 28,
2017
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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 INDEX
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Exhibit
No.
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Description
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Securities
Purchase Agreement, dated August 14, 2017, between Exactus, Inc.
and Morningview Financial, LLC
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Convertible
Promissory Note dated August 14, 2017
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| 10.3 |
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Registration
Rights Agreement, dated August 14, 2017, between Exactus, Inc. and
Morningview Financial, LLC
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