Item 1.01 Entry into a Material Definitive Agreement.
Panacea Life Sciences, Inc. Acquisition
On June 30, 2021, Exactus, Inc. (the "Company") acquired Panacea Life Sciences,
Inc. ("Panacea") pursuant to a Securities Exchange Agreement (the "Agreement")
with the shareholders of Panacea including its founder Leslie Buttorff and
22ndCentury Group, Inc., ("XXII"), a principal investor.
Panacea Life Sciences is a woman-owned and woman-led company, dedicated to
developing and producing the highest-quality, most medically relevant, legal,
hemp-derived cannabinoid products for consumers and pets. Beginning at PANA
Organic Botanicals located at Needle Rock, Colorado and throughout its 51,000
square foot, state-of-the-art, cGMP, extraction, manufacturing, testing and
fulfillment center located in Golden, Colorado, Panacea operates in every
segment of the CBD product value chain. From cultivation to finished goods, the
company ensures its products with stringent testing protocols employed at every
stage of the supply chain. Panacea offers the purest natural remedies within
product lines for every aspect of life: PANA Health™, PANA Beauty®, PANA Sport™,
PANA Pet®, PANA Pure® and PANA Life™.
Panacea, which was founded by Leslie Buttorff in 2017 as a woman-owned business,
attracted $14 million in investment from XXII (NYSE-American:XXII) during 2019,
a leading plant biotechnology company focused on technology to decrease nicotine
in tobacco plants also uses its expertise for genetic engineering of hemp plants
to modify cannabinoid levels used in manufacturing CBD, CBG and CBN. Following
the closing, XXII owns approximately 11.6% stake in the combined companies on a
fully diluted basis.
From its 51,000 square foot cGMP certified facility in Golden, Colorado, Panacea
produces soft gels, gummies, tinctures, sublingual tablets, cosmetics and other
topicals for purchase online (www.panacealife.com) and in stores as well as in
smart kiosk vending machines being rolled out nationally. Panacea also founded
the Cannabinoid Research Center at Colorado State University and supports
medical studies designed to evaluate the effects of cannabinoids in human health
and wellness where several scientific studies are under way.
Ms. Buttorff entered the CBD arena when she launched a world-class SAP-based ERP
system developed for the cannabis industry at Quintel-MC, Incorporated
("Quintel") which tracks the full chain of custody for every product that has
been deployed at Panacea and which distinguishes Panacea from the majority of
hemp farms and CBD companies who fail to employ accurate supply-chain accounting
and reporting in the emerging hemp industry.
Ms. Buttorff, age 64, became the Chief Executive Officer and Chief Financial
Officer of the Company on July 1, 2021. In October, 2017 she founded Panacea,
where she has served as Chief Executive Officer and director. From April 1, 2002
to date, she has been the President of Quintel, a software company with a focus
on enterprise resource planning (ERP).
Ms. Buttorff has over 40 years of experience in management, marketing,
consulting, technical evaluations, and financial analyses. Her experience has
been focused on strategic planning, strategic customer management, operations
improvement, and acquisition evaluations and integration.
Under the terms of the Agreement the Company issued Ms. Buttorff and her
affiliates 1,000,000 shares of Series C Convertible Preferred Stock, 10,000
shares of Series C-1 Convertible Preferred Stock and 10,000 shares of Series D
Convertible Preferred Stock, which preferred shares convert into approximately
17.8% of the Company's Common Stock and issued Panacea shareholders including
Ms. Buttorff 473,639,756 shares of Common Stock in exchange for 100% of the
shares of capital stock of Panacea. On a fully diluted basis, Ms. Buttorff
beneficially owns approximately 61% of outstanding Common Stock consisting of
the Common Stock issuable upon conversion preferred shares and shares of Common
Stock. The Company intends to change its name to Panacea Life Sciences Holdings,
Inc., subject to regulatory compliance.
On June 30, 2021, the Company and Leslie Buttorff entered into an Employment
Agreement (the "Employment Agreement") whereby Ms. Buttorff is employed by the
Company as its Chief Executive Officer until terminated in accordance with the
terms thereof on substantially the same terms as her existing employment at
Panacea including an annual salary of $380,000. Under her Employment Agreement
Ms. Buttorff will also be entitled to $2.2 million of shares of the Company's
common stock upon approval of the common stock for listing on The NASDAQ Market,
with the number of such shares to be determined using the 20 day daily per-share
volume-weighted average price of the common stock on the day immediately prior
to the day of commencement of trading on The NASDAQ Market, and vesting on June
30, 2022. Also on June 30, 2021 the Company and Ms. Buttorff and Mr. Wert
entered into an Indemnification Agreement providing for indemnification and
advancement of expenses in certain circumstances.
Also in connection with the Agreement, Nathan Berman became Secretary,
Controller and Principal Accounting Officer on June 30, 2021. Since January,
2018, Mr. Berman has been employed by Panacea as its Controller. Previous to
Panacea he was employed by Quintel as Senior Financial Consultant commencing in
April, 2017. Mr. Berman's exposure to the CBD and cannabinoid market started
while working for Quintel, where he assisted in developing and implementing an
Enterprise Resource Planning software called ERPCannabis; a software that can be
used by public marijuana and similar companies to run back-office operations and
provide financial reporting. Prior to working for Quintel, Mr. Berman worked for
Media Audits International from 2013 to 2017 as an auditor providing audit and
management services on behalf of large broadcast corporations.
The foregoing description of the terms of the Agreement and the Indemnification
Agreements are qualified in their entirety by reference to the full text of the
Agreement and the Indemnification Agreements, forms of which are filed as
Exhibits 10.1 and 10.2 to this Current Report on Form 8-K which are incorporated
herein by reference.
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Designations of Preferred Stock
On June 29, 2021 the Company filed with the Secretary of State of the State of
Nevada three new series of preferred stock ("Preferred Stock") designated as
Series C Convertible Preferred Stock, Series C-1 Preferred Stock and Series D
Preferred Stock and authorized the filing of a Certificate of Designation of
Preferences, Rights and Limitations of Series C Convertible Preferred Stock,
Series C-1 Convertible Preferred Stock and Series D Convertible Preferred Stock
in the State of Nevada. The Board designated for issuance 1,000,000, 10,000 and
10,000 shares, respectively, for issuance. Each share of Preferred Stock is
convertible into shares of the Company's Common Stock as provided in the
Certificate of Designation therefore. The new Preferred Stock was issued to Ms.
Buttorff and affiliates at the closing.
The foregoing description of the Series C Convertible Preferred Stock, Series
C-1 Convertible Preferred Stock and Series D Convertible Preferred Stock does
not purport to be complete and is qualified in its entirety by reference to the
complete text of the Certificates of Designation of Preferences, Rights and
Limitations, which were filed as Exhibits 3.1, 3.2 and 3.3 to the Company's
Current Report on Form 8-K filed on June 29, 2021 and are incorporated herein by
reference.
Reverse Split
On June 30, 2021, the Board authorized the Company to file a certificate of
amendment (the "Amendment") to its Amended and Restated Articles of
Incorporation with the Secretary of State of the State of Nevada in order to
effectuate a reverse stock split of the Company's issued and outstanding common
stock, par value $0.0001 per share on a one-for-28 basis (the "Reverse Stock
Split").
The Reverse Stock Split will be effective with the Financial Industry Regulatory
Authority ("FINRA") upon notification from FINRA and the Company's Common Stock
is expected to thereafter trade with a "D" added, under the symbol "EXDID", for
the 20 business days following approval to designate that it is trading on a
post-reverse split basis. The Company will file an additional Current Report on
Form 8-K and issue a press release upon notification of the trading dates by
FINRA and will have a new CUSIP number together with an amendment to its
Articles of Incorporation with the State of Nevada upon clearance by FINRA.
As a result of the Reverse Stock Split, every 28 shares of the Company's
pre-reverse split Common Stock will be combined and reclassified into one share
of the Company's Common Stock. No fractional shares of Common Stock will be
issued as a result of the Reverse Stock Split. Shareholders who otherwise would
be entitled to a fractional share shall receive the next higher number of whole
shares.
As previously disclosed on a Current Report on Form 8-K filed on April 6, 2021,
on March 31, 2021, shareholders of record holding a majority of the outstanding
voting capital of the Company approved a reverse stock split of the Company's
issued and outstanding common stock by a ratio of not less than
one-for-twenty-five and not more than one-for-one-hundred at any time prior to
December 31, 2021, with such ratio to be determined by the Board, in its sole
discretion. The Reverse Stock Split ratio of one-for-28 basis was approved by
the Board on June 28, 2021.
Amended Articles and Bylaws
On June 30, 2021, the Board approved an amendment to the Company's Articles of
Incorporation ("Articles Amendment") and amendment to the Company's bylaws (the
"Bylaw Amendment"). Following the closing, the holder of the majority of the
Company's voting power approved the Articles Amendment, which will be effective
following regulatory compliance including clearance by FINRA.
The Articles Amendment, which is also subject to filing with the State of
Nevada, changes our name to Panacea Life Sciences Holdings, Inc. and generally
updates Article VII "Indemnity" to provide indemnification for directors,
officers, employees and agents of the Company serving at the request of the
Company or another entity.
The Bylaw Amendment, which is effective upon approval by the Board, generally
provides various procedures and requirements for Special Meetings of
shareholders, sets the quorum for meetings of shareholders for the transaction
of any business to one-third of the outstanding shares of stock entitled to
vote, establishes procedures for action by written consent and establishing a
record date for voting by written consent, establishes certain advance notice
requirements for shareholder proposals, provides for discretionary and mandatory
indemnification of directors, officers, employees and agents of the Company and
establishes the State of New York as the sole and exclusive forum for certain
disputes and litigation, including any derivative action, and action claiming
breach of fiduciary duty, any action asserting a claim arising under the Nevada
Revised Statues, the Articles of Incorporation of the Bylaws, and under any
"internal affairs" doctrine.
The foregoing description of the proposed Articles Amendment and Bylaw Amendment
does not purport to be complete and is qualified in its entirety by reference to
the complete text of the Articles Amendment and Bylaw Amendment which are filed
as Exhibits 3.1 and 3.2 to this Current Report on Form 8-K and are incorporated
herein by reference.
Item 7.01 Regulation FD Disclosure.
On July 1, 2021, the Company issued a press release announcing the acquisition
of Panacea under the Agreement. A copy of the press release is being furnished
herewith as Exhibit 99.1.
The information in this Item 7.01 (including Exhibit 99.1) shall not be deemed
"filed" for purposes of Section 18 of the Exchange Act or otherwise subject to
the liabilities under such section, and shall not be deemed to be incorporated
by reference into any filing of the Company under the Securities Act, or the
Exchange Act.
ITEM 9.01
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