Item 3.02 Unregistered Sales of Equity Securities.
During the first and second quarter of 2021 we resolved numerous claims and
lawsuits against the Company. As a result, we agreed to issue a total of
approximately 2,959,616 shares of our restricted common stock, par value $0.001
per share ("Common Stock") in connection with previously unpaid employee
compensation and claims asserted by various vendors and consultants, as more
fully described in Item 7.01. The foregoing issuances do not involve any public
offering and are exempt from registration pursuant to Section 4(a)(2) of the
Securities Act of 1933, as amended.
After giving effect to the issuances described above, and the conversion of
shares of our preferred stock (without regard to the beneficial ownership
blockers of our Series A Preferred Stock outstanding), a total of 145,654,137
shares of our Common Stock will be issued and outstanding, on a fully-diluted
basis. As of the date of this Agreement, 450 shares of our Series A Preferred
Stock and 1,500,000 shares of our Series B-1 Preferred Stock and 6,000,000
shares of our Series B-2 Preferred Stock are issued and outstanding which are
exercisable for our Common Stock. 9,000,000 shares of our Common Stock may be
issued upon conversion of our Series A Preferred Stock outstanding, 187,000
shares of our Common Stock may be issued upon conversion of our Series B-1
Preferred Stock outstanding, and 750,000 shares of our Common Stock may be
issued upon conversion of our Series B-2 Preferred Stock outstanding.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 28, 2021, Lawrence Wert, our Executive Chairman, and Andrew Johnson, our
Chief Strategy Officer were appointed the Principal Executive Officer and
Principal Accounting Officer, respectively, of the Company. On June 26, 2021,
Daniel Alberttis resigned as the Company's Chief Operating Officer and Director
and John Price resigned as the Company's Chief Financial Officer and Director.
Mr. Price was chairman of our Audit Committee and a member of our Compensation
and Governance Committee. The resignations were not a result of any disagreement
between the Company on any matter relating to the Compay's operations, policies
or practices. Effective with the resignation the size of our Board of Directors
("Board") is two directors consisting of Mr. Wert and Julian Pittam. Mr. Wert
and Mr. Johnson were awarded 1,000,000 and 100,000 five-year options,
respectively, under the 2021 Plan subject to approval of the 2021 Plan by
shareholders vesting 50% upon issuance and 50% upon the satisfaction of certain
conditions.
2021 Plan
On June 28, 2021, the Board approved and adopted, subject to shareholder
approval on or prior to June 28, 2022, the Company's 2021 Equity Incentive Plan
(the "2021 Plan").
The 2021 Plan authorizes the issuance of up to an aggregate maximum of 20% of
the issued and outstanding shares of the Common Stock after giving effect to
future anticipated issuances, subject to adjustment as described in the 2021
Plan. The 2021 Plan shall be administered by the Board or a committee appointed
by the Board (the "Committee"), which shall consist of two or more directors who
qualify as (i) "Independent Directors" (as such term is defined under the rules
of the NASDAQ Stock Market), and (ii) "Non-Employee Directors" (as such term is
defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended). The
Committee, in its discretion, selects the individuals to whom awards may be
granted, the time or times at which such awards are granted, and the terms of
such awards. The 2021 Plan authorizes the Company to grant stock options,
restricted stock, preferred stock, other stock based awards, and performance
awards. Awards may be granted to the Company's directors, officers, consultants,
advisors and employees. Unless earlier terminated by the Board, the 2021 Plan
will terminate, and no further awards may be granted, after June 27, 2031.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Reverse Split
On June 26, 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 $0.001 per share on a one (1) for twenty-eight (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" or
other symbol, 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
effectiveness by FINRA.
As a result of the Reverse Stock Split, every twenty-eight (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 our 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 Company's Board of
Directors, in its sole discretion. The Reverse Stock Split ratio of one (1) for
twenty-eight (28) basis was approved by the Company's Board of Directors on June
28, 2021.
Amended Articles and Bylaws
On June 26, 2021, the Board approved an amendment to the Company's Articles of
Incorporation ("Articles Amendment") and submission of the Articles Amendment to
the shareholders of the Company for approval, and an amendment to the Company's
bylaws (the "Bylaw Amendment").
The Articles Amendment, which is subject to shareholder approval and filing with
the State of Nevada, 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 immediatelyeffective 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 (1/3) 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, an 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 descriptions of the Articles Amendment and Bylaw Amendment do not
purport to be complete and are qualified in their entirety by reference to the
complete text of the Articles Amendment and Bylaw Amendment which shall be filed
prior to the due date for the Company's next quarterly report on Form 10-Q in
accordance with the Rules and Regulations of the SEC.
Item 7.01 Regulation FD Disclosure.
Two pending lawsuits against the Company have been settled and dismissed: (1)
Case No. 2021-011761 CA 01 pending in Miami-Dade County, Florida; and (2) Case
No. 50-2021 CA 000853 MB pending in Palm Beach County, Florida. The terms of the
settlements are required to be kept confidential.
Item 8.01 Other Events.
On June 28,2021 the Board established three new series of preferred stock
("Preferred Stock") designated as Series C Convertible Preferred Stock, Series
C-1 ConvertiblePreferred Stock and Series D ConvertiblePreferred 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 C-2 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. No shares of Preferred Stock have been issued as of the
date of this Current Report on Form 8-K.
The Company estimates approximately $585,000 of previously reported liabilities
and potential payments were eliminated or settled during the second quarter of
2021 upon the payment of approximately $115,000 cash and agreement to issue
shares of Common Stock, including approximately $335,000 previously reported as
"Accounts Payable", $250,000 previously reported as "Subscription Payable"
relating to the acquisition of Green Goddess Extracts, LLC and $88,000 to a
third-party vendor related to our prior Interim Chief Executive Officer. In
addition, during most of 2020 we were engaged in marketing of hemp derived
products sourced from our leased farming operations. Through our majority-owned
subsidiary, Exactus One World, LLC ("EOW") we held one-year leases for
approximately 200 acres of farmland in southwest Oregon for growing hemp. Our
initial efforts to pursue agricultural development, including farm soil
preparation, planting, harvesting, transportation and drying, were situated at
farms from which we shipped hemp biomass to third parties for processing. Due to
a rapid decline in commodity prices for industrial hemp experienced during 2020
we suspended all farming operations during 2020, and entered into a supply
agreement with Hemptown USA, Inc. to provide us with industrial hemp.During the
second quarter of 2021, the Company secured confirmation from the managers of
EOW that the leases terminated on or about February 2020. Accordingly, the
Company does not believe it is required to account for future leasing
obligations following the termination of such leases and expects to seek to
eliminate various accrued lease obligations from future financial reports and
filings with the SEC, subject to confirmation from our auditors.
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 are filed as Exhibit 3.1, 3.2 and 3.3 hereto and which is
incorporated herein by reference.
Our Quarterly Report for the quarter ended March 31, 2021 filed with the SEC
incorrectly reported the number of shares of our Series A Preferred Stock
authorized and outstanding. As previously reported in our Current Report on Form
8-K filed with the SEC on February 18, 2021, on February 16, 2021 we authorized
1,000 shares of a new 0% Series A Convertible Preferred Stock with a stated
value of $1,000 per share and a conversion price of $0.05 per share and issued
500 shares to an institutional investor.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
The exhibit listed in the following Exhibit Index is furnished as part of this
Current Report on Form 8-K.
Exhibit No. Description
3.1 Certificate of Designation of Preferences, Rights and Limitations of
Series C Convertible Preferred Stock.
3.2 Certificate of Designation of Preferences, Rights and Limitations of
Series C-1 Convertible Preferred Stock.
3.3 Certificate of Designation of Preferences, Rights and Limitations of
Series D Convertible Preferred Stock.
10.1 2021 Executive Incentive Plan.© Edgar Online, source Glimpses
PANACEA LIFE SCIENCES HOLDINGS, INC. 
