Item 9.01 Financial Statements and Exhibits
Form 10 Information
Item 7. Certain Relationships and Related Party Transactions, and Director
Independence
Item 10. Recent Sales of Unregistered Securities
The information set forth in the following Current Report, when considered in
the light of the information previously reported in the above periodic reports,
completes the Company's Form 10 Information.
3
FORWARD LOOKING STATEMENTS
The following discussion, in addition to the other information contained in this
Current Report, should be considered carefully in evaluating our prospects. This
Report (including without limitation the following factors that may affect
operating results) contains forward-looking statements (within the meaning of
Section 27A of the Securities Act of 1933, as amended ("Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act")
regarding us and our business, financial condition, results of operations and
prospects. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions or variations of such
words are intended to identify forward-looking statements but are not the
exclusive means of identifying forward-looking statements in this Report.
Additionally, statements concerning future matters such as revenue projections,
projected profitability, growth strategies, possible changes in legislation and
other statements regarding matters that are not historical are forward-looking
statements.
ADDITIONAL INFORMATION
You are urged to read this Current Report carefully. This Current Report is not
all-inclusive and does not contain all the information that you may desire in
evaluating the Company. You must conduct and rely on your own evaluation of the
Company, including the merits and risks involved in making a decision to invest
in our stock. No representations or warranties of any kind are intended nor
should any be inferred with respect to the economic viability of the Company or
with respect to any benefits, which may accrue as a result of an investment in
the Company. The Company does not in any way represent, guarantee or warrant an
economic gain or profit with regard to our business. We do not in any way
represent or warrant the advisability of investing in our stock. Any
projections, forecasts, or other forward-looking statements or opinions
contained in this Current Report constitute estimates by us based upon sources
deemed to be reliable, but the accuracy of this information is not guaranteed
nor should you consider the information all-inclusive.
As used in this Current Report and unless otherwise indicated, the terms "we,"
"us," "our," the "Company," and "BKUH" refer to Bakhu Holdings Corp.
Item 1.01 Entry Into A Material Definitive Agreements.
Efficacy Demonstration Laboratory Agreement
On June 10, 2020, Bakhu Holdings Corp. ("Bakhu") and the OZ Corporation entered
into an Efficacy Demonstration Laboratory Agreement to memorialize
understanding, and agreement by and between Bakhu and OZ that commenced on or
about May 1, 2020, under which Bakhu engaged OZ to continue preparation for and
completion of the Efficacy Demonstration required under that certain Patent and
Technology License Agreement dated December 20, 2018, as amended and restated in
that certain Amended and Restated Patent and Technology License Agreement dated
December 31, 2019, and as further amended from time to time (the "License
Agreement"), by and between Cell Science Holding Ltd., a Cypress corporation
("Cell Science"), as Licensor and Bakhu, as Licensee.
Pursuant to the License Agreement Bakhu is required to complete and pay the
costs of an "Efficacy Demonstration" of the propriety science underlying the
licensed technology as specified in the License Agreement.
Bakhu has a class of equity securities registered under Section 12(g) of the
Securities Exchange Act of 1934 (the "Exchange Act") and, as such, due to the
regulatory environment related to cannabis, wanted to avoid handling cannabis
and cannabis components, products, or derivatives, which would have been
required if Bakhu were to undertake the Efficacy Demonstration itself. .
4
Bakhu, realizing the benefits resulting from successful completion of the
Efficacy Demonstration and in order to implement Bakhu's business goal of
sublicensing to third parties the technology with which they can produce
cannabis and cannabis components, products, or derivatives, engaged OZ to
undertake completion of the Efficacy Demonstration required under the License
Agreement, on Bakhu's behalf.
On March 8, 2019, in furtherance of proceeding with and conducting the Efficacy
Demonstration under the License Agreement on behalf of Bakhu, OZ, Cell Science,
and VO Leasing Corp., a California corporation ("VOLC"), entered into that
certain Research and Develop Agreement respecting the Efficacy Demonstration
(the "R&D Agreement"). VOLC is lessee of a facility located at 15614 Oxnard
Avenue, Sherman Oaks, California (the "Facility") that is suitable for a
laboratory to conduct research and development of cannabis cell growing and cell
growth technology relating to the Efficacy Demonstration. VOLC has represented
that it has all required and applicable licenses, regulatory authorizations, and
consents from all governmental authorities required to conduct the proposed
activities involving cannabis and cannabis components, products, or derivatives
at the Facility. The work to be undertaken by or at the direction of OZ under
the R&D Agreement, on behalf of Bakhu is intended to meet the requirements under
the License Agreement to complete an Efficacy Demonstration.
The foregoing summary descriptions of the terms of the Efficacy Demonstration
Laboratory Agreement is summaries only and does not purport to be complete, may
not contain all information that is of interest to the reader and is qualified
in its entirety by reference to the full text thereof of such agreement, which
is incorporated herein as Exhibit 10.6, by reference.
Item 5.06 Change in Shell Company Status.
With the entry into the material agreements described and attached as exhibits
to the Current Report on Form 8-K filed on December 27, 2018, the Company had
material assets and operations that entitled it to terminate its shell status as
of that date. However, it did not elect to do so at that date pending the
completion of additional steps to build business operations based on its new
material contracts and obtain additional external financing. As a result of the
Company entering into the additional material agreements, described and attached
as exhibits to the Periodic Reports filed on the dates set forth above and
incorporated herein by reference, and the Company's business operations
resulting therefrom, the Company is no longer a shell company as that term is
defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.
As noted in the above Introductory Statement, certain of the information that is
required by Item 5.06 has previously been reported, as that term is defined in
Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), in the following periodic
reports.
FORM 10 DISCLOSURE
The information set forth in this Current Report, when considered in the light
of the above previously filed periodic reports which are incorporated herein by
reference, completes the Company's Form 10 Information.
5
Item 7. Certain Relationships and Related Party Transactions, and Director
Independence
Certain Relationships
The Company obtained the license on of rights to the intellectual property on
which its business is based was licensed from Cell Science Holding Ltd., which
is owned 40% by Inter-M Traders Ltd., 30% by Mentone Ltd., and 30% by The OZ
Corporation.
Inter-M Traders Ltd., is a family owned equity investment fund with its
principal office in Cyprus and an office in New York City. Demetri Michalakis
owns a controlling interest in, and is the Managing Director of, Inter-M Traders
Ltd.
Mr. Michalakis is the father of Aristotle Popolizio
Aristotle Popolizio is a Director of the Company, and also serves as the head of
Investment Relations at Inter-M Traders Ltd., and leads a team in research,
raising capital and the development of operational risk management plans for
Inter-M Traders Ltd.
Evripides (Roy) Drakos is a Director the Company, and is also a shareholder of,
and serves as an Investment Advisor for, Inter-M Traders Ltd.
Mentone Ltd., a company organized under the laws of the United Kingdom is owned
by Dr. Peter Whitton, Geoffrey Dixon, and Karl Watkin.
Dr. Peter Whitton, is a director the Company and is also the inventor of the
Licensed Science which is the subject of the Restated License set forth in Item
1.01 above, and as a result of his ownership in Mentone Ltd., has an indirect
interest in the Licensor, Cell Science Holding Ltd.
The OZ Corporation is a California corporation. John R. Munoz is the sole owner,
director, and officer of The OZ Corporation. The OZ Corporation and Mr. Munoz
collectively, are currently the beneficial owners of 18,739,397 shares of Common
Stock representing 6.25% of outstanding shares of Common Stock, and 4 shares of
Series A Preferred Stock of the Company representing 100% of outstanding shares
of Series A Preferred Stock. Due to the super-voting rights of the Series A
Preferred Shares, the OZ Corporation and John R. Munoz have voting control of
the Company. Additionally, and as a result of its ownership in Cell Science, the
OZ Corporation has an indirect interest in the Licensor, Cell Science.
Thomas K. Emmitt, a director, the President, CEO, Chief Financial Officer and
Secretary of the Company, also serves as in-house counsel to the OZ Corporation
Except as set forth above, none of the above parties has, since our date of
incorporation, had any material interest, direct or indirect, in any transaction
with us or in any presently proposed transaction that has or will materially
affect us.
Related Party Transactions
The following transactions to which the Company is a party, were entered into
between related parties and are not, therefore, the result of arm's length
negotiations.
6
Patent and Technology License
As previously reported, the Company, as Licensee and Cell Science, as Licensor,
are parties to that certain Patent and Technology License Agreement dated
December 20, 2018, as amended and restated in that certain Amended and Restated
Patent and Technology License Agreement dated December 31, 2019, and as further
amended from time to time (the "License Agreement"). As consideration for the
grant of the License with respect to the Licensed Science (as defined in the
License Agreement, the Company issued 210,000,000 shares of Common Stock of the
Company, to the Licensor. As additional consideration for the grant of the
License, the Company shall make a one-time payment of $3,500,000 cash payment to
Licensor, upon completion of the Efficacy Testing which results in at least the
Standard Result claimed by Licensor.
Efficacy Demonstration Laboratory Agreement
As stated in Item 1.01 above, the Company and the OZ Corporation are parties
that that certain Efficacy Demonstration Laboratory Agreement which memorializes
the understanding and agreement by and between the Company and the OZ
Corporation under which the Company engaged the OZ Corporation to undertake the
Efficacy Demonstration required under the License Agreement. Pursuant to the
Efficacy Demonstration Laboratory Agreement the Company will repay all costs
incurred by the OZ Corporation in performing the Efficacy Demonstration in
accordance with Efficacy Demonstration Laboratory Agreement.
OZ Advances to the Company
The Company's controlling shareholder, the OZ Corporation has advanced or paid
for certain expenses associated with the Company's operations, or loan monies to
the Company. Such advance or loans are evidenced by a Promissory Note dated
August 1, 2019. As of April 30, 2020, the outstanding principal balance and
accrued interest owing under the promissory note were $299,278 and $9,563,
respectively. Pursuant to the terms of the promissory note, the principal and
accrued and unpaid simple interest at the rate of 6.0% per annum ("Applicable
Rate") shall be due and payable on or before December 31, 2019 (the "Maturity
Date"). The principal amount of the promissory note shall be increased by the
amount of any additional advances of funds made by The OZ Corporation to the
Company, from time to time, from the date of such advance. Provided that the
Company is not in default, the Company may extend the term of the promissory
note by an addition 12 months by paying an extension fee of 1.00% of the
outstanding principal loan balance, which may at The OZ Corporation's option be
advanced and added to the then outstanding principal balance. Under the terms of
the promissory note, The OZ Corporation, at its option may, at any time, convert
all or any portion of the then unpaid principal balance and any unpaid accrued
interest into shares of the Company's common stock. The number of shares of
common stock to be issued upon such conversion shall be equal to the quotient
obtained by dividing (i) the then unpaid principal balance and any unpaid
accrued interest of the promissory note being converted by (ii) 80% of the
average closing price of the common stock of the Company, for the ninety (90)
trading days before the conversion date, rounded up to the nearest whole share.
Consulting Services
On March 9, 2020, the Company issued issue 11,061,816 restricted shares of
Common Stock to the OZ Corporation in consideration of the consulting and
advisory services provided to the Company, valued at $553,091.
7
Company Facilities
The Company currently uses the office space and equipment of The OZ Corporation
and our Chief Executive Officer at no cost.
______________________
Except as set forth above, the Company has not been a party to any transactions
between persons who were, at the time of the transaction, an executive officer,
director, or principal stockholder of the Company.
Review, Approval or Ratification of Transactions with Related Persons
The Company has no policies respecting the resolution of conflicts of interests
in transaction between related parties.
Promoters and Certain Control Persons
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
Director Independence
The Board currently has four members, Thomas K. Emmitt, Dr. Peter Whitton,
Aristotle Popolizio, and Evripides (Roy) Drakos. Based on the relationship of
these directors as set forth above, none of these Board members has met the
independence requirements based upon the application of objective categorical
standards adopted by the Board. In making a determination regarding a Director's
independence, the Board considers all relevant facts and circumstances,
including the Director's commercial, banking, consulting, legal, accounting,
charitable and familial relationships and such other criteria as the Board may
determine from time to time.
Item 10. Recent Sales of Unregistered Securities
During the past three years preceding the Company has issued securities without
registration under the Securities Act on the terms and circumstances described
below.
Fiscal Year Ending July 31, 2020
On March 9, 2020, the Company issued 11,061,816 restricted shares of Common
Stock to the OZ Corporation, in consideration of ongoing consulting and advisory
services provided to the Company, on terms as previously agreed to the Company
and the OZ Corporation. The securities were issued pursuant to an exemption from
registration provided by Section 4(a)(2) of the Securities Act of 1933. The OZ
Corporation is an "Accredited Investor" as defined under Rule 501 of Regulation
D of the Act and has such knowledge and experience and possessed such
information as it deemed necessary to make an informed investment decision.
Fiscal Year Ended July 31, 2019
On April 7, 2019, the Company issued 7,000,000 restricted shares of Common Stock
to Robert Stevens, the prior receiver, upon the conversion of notes payable and
accrued interest in the aggregate amount of $10,199. No underwriting discounts
were given or commissions paid in connection with this transaction. The shares
were issued pursuant to an exemption from registration provided by Section
4(a)(2) of the Securities Act of 1933. As former receiver of the Company, Mr.
Stevens was familiar with the Company's business, financial condition and
possessed the necessary information to make an informed investment decision.
8
Fiscal Year Ended July 31, 2018
On December 20, 2018, the Company issued 210,000,000 restricted shares of common
stock to the Licensor, Cell Science Holding Ltd., in consideration of the grant
of the license to the Company pursuant to the terms of the Original License
between the Company and Licensor. No underwriting discounts were given or
commissions paid in connection with this transaction. The shares were issued
pursuant to an exemption from registration provided by Section 4(a)(2) of the
Securities Act of 1933, as amended (the "Act'). The Licensor is an "Accredited
Investor" as defined under Rule 501 of Regulation D of the Act and has such
knowledge and experience and possessed such information as it deemed necessary
to make an informed investment decision.
On August 8, 2018, the Company issued four (4) shares of Series A Preferred
Stock to the OZ Corporation, in satisfaction for consulting services rendered by
the Oz Corporation to the Company. No solicitation was made and no underwriting
discounts were given or paid in connection with this transaction. The shares
were issued pursuant to an exemption from registration provided by Section
4(a)(2) of the Securities Act of 1933, as amended (the "Act'). The OZ
Corporation is an "Accredited Investor" as defined under Rule 501 of Regulation
D of the Act and has such knowledge and experience and possessed such
information as it deemed necessary to make an informed investment decision.
On July 16, 2018, the Company issued 720,000 restricted shares of common stock
to Somerset Capital, Ltd., a limited company owned and controlled by Robert
Stevens, in satisfaction of debt of the Company in the amount of $44,019. No
solicitation was made and no underwriting discounts were given or paid in
connection with this transaction. The shares were issued pursuant to an
exemption from registration provided by Section 4(a)(2) of the Securities Act of
1933, as amended (the "Act'). As former executive officer of the Company
Mr. Stevens was intimately acquainted with the Company's business plan and
proposed activities at the time of issuance, is an accredited investor and
possessed information on the Company necessary to make an informed investment
decision.
On June 11, 2018, the Company issued 70,614,117 restricted shares of common
stock to the OZ Corporation, at a price of $0.05 per share, in consideration of
consulting services provided to the Company by the OZ Corporation valued at
$3,530,706. No solicitation was made and no underwriting discounts were given or
paid in connection with this transaction. The shares were issued pursuant to an
exemption from registration provided by Section 4(a)(2) of the Securities Act of
1933, as amended (the "Act'). The OZ Corporation is an "Accredited Investor" as
defined under Rule 501 of Regulation D of the Act and has such knowledge and
experience and possessed such information as it deemed necessary to make an
informed investment decision.
On May 15, 2018 the Company issued 335,000 restricted shares common stock to
the OZ Corporation, at price of $1.00 per share, in cash. No solicitation was
made and no underwriting discounts were given or paid in connection with this
transaction. The shares were issued pursuant to an exemption from registration
provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the
"Act'). The OZ Corporation is an "Accredited Investor" as defined under Rule 501
of Regulation D of the Act and has such knowledge and experience and possessed
such information as it deemed necessary to make an informed investment decision.
9
On January 12, 2018 the Company affected a 1-for-200 reverse split of the
Company's issued and outstanding common stock which reduced the outstanding
shares from approximately 45,000,000 shares to 260,037 shares outstanding. In
connection with the split, any shareholder who owned shares as of the record
date and would have received less than 100 post-split shares after effecting the
split, received 100 post-split shares.
As of July 31, 2009 and through January 12, 2018, there were 45,000,000 shares
of common stock issued and outstanding.
****** END OF FORM 10 DISCLOSURE ******
Item 8.01 Other Information
The Company's Standard Industrial Classification (SIC) Code has changed from
1040 - Gold & Silver Ores to 6794- Patent Owners and Lessors.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements. We incorporate by reference in this Current
Report the Financial Statements included in the following periodic reports
previously filed by the Company:
· Our Annual Report on Form 10-K, for the fiscal year ended July 31, 2019;
· Our Amended Annual Report on Form 10-K/A, for the fiscal year ended July 31,
2019; and
· Our Quarterly Reports on Form 10-Q, and any amendments thereto, for the
quarterly periods ended October 31, 2019 and January 31, 2020.
(d) Exhibits. The following exhibits are either filed as a part hereof or
are incorporated by reference. Exhibit numbers correspond to the numbering
system in Item 601 of Regulation S-K.
Exhibit
Number Description of Exhibit
3(i) Amended and Restated Articles of Incorporation (1)
3(ii) Amended and Restated By-laws (1)
3(iii) Certificate of Designation of Series A Preferred Stock (1)
3(iv) Certificate of Designation of Series B Preferred Stock (1)
10.1 Patent and Technology License Agreement dated December 20, 2018 (2)
10.2 Amended and Restated Patent and Technology License Agreement dated
December 31, 2019 (3)
10.3 CBD Biotech Sublicense dated January 5, 2020 (5)
10.4 Strategic Alliance Agreement between CBD Biotech and ICS dated April
17, 2020 (4)
10.5 Sublicense Agreement between CBD Biotech and ICS dated April 22,
2020 (4)
10.6 Efficacy Demonstration Laboratory Agreement between the Company and
the OZ Corporation (5)
21.1 Subsidiaries (5)
--------------------------------------------------------------------------------
(1) Incorporated by reference from our Current Report on Form 8-K filed with the
SEC on August 22, 2018
(2) Incorporated by reference from our Current Report on Form 8-K filed with the
SEC on December 27, 2018
(3) Incorporated by reference from our Current Report on Form 8-K filed with the
SEC on January 14, 2020
(4) Incorporated by reference from our Current Report on Form 8-K filed with the
SEC on April 27, 2020
(5) Filed herewith
10
© Edgar Online, source Glimpses