Issuance of Convertible Notes and Warrants
On November 27, 2019, Exactus, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single institutional investor (the “Purchaser”), to which the Company agreed to sell to Purchaser in a series of 3 closings up to $1,944,444 in aggregate principal amount of the Company’s senior secured convertible promissory notes (the “Notes”) and warrants to purchase shares of the Company’s Common Stock (the “Warrants”). On November 27, 2019 (the “Initial Closing Date”), the Company issued a Note, convertible into 5,663,014 shares of Common Stock, in the principal amount of $833,333, and a Warrant to purchase 275,612 shares of Common Stock. The second closing, subject to the closing conditions in the Purchase Agreement, is expected to occur on the third business day after the date of the filing of a registration statement on Form S-1 (or another appropriate form in accordance with the Registration Rights Agreement, as described below), on which date the Purchaser is expected to purchase $277,778 in aggregate principal amount of Notes and Warrants to purchase shares of Common Stock for $250,000. The third closing, subject to the closing conditions in the Purchase Agreement, is expected to occur on the date the registration statement on Form S-1 (or another appropriate form in accordance with the Registration Rights Agreement, as described below) is declared effective by the Securities and Exchange Commission (the “SEC”). On the third closing, the Purchaser is expected to purchase $833,333.33 in aggregate principal amount of Notes and Warrants to purchase shares of Common Stock for $750,000.
The Notes, which are convertible into Common Stock at any time at the discretion of the Purchaser at a conversion price of $0.50 per share of Common Stock, will be issued at a 10% original issue discount and bear an interest rate of 8%. The Notes mature one year after their issuance unless accelerated due to an event of default. The Notes are redeemable, in whole or in part, at any time at the discretion of the Company. At the Initial Closing Date, the Company received net proceeds, after the original issue discount and the Purchaser’s counsel fees, of $730,000.
The Notes contain standard and customary events of default including, but not limited to, failure to make payments when due, failure to observe or perform covenants or agreements contained in the Notes, the breach of any material representation or warranty contain therein, the bankruptcy or insolvency of the Company, the suspension of trading of Common Stock, the Company’s failure to file required reports with the SEC, and a change of control of the Company. If any event of default occurs, subject to any cure period, the full principal amount, together with interest (including default interest of 18% per annum) and other amounts owing in respect thereof to the date of acceleration shall become, at the Purchaser’s election, immediately due and payable in cash.
The Notes are fully and unconditionally guaranteed on a senior secured basis by the direct and indirect subsidiaries of the Company (collectively, the “Guarantors”, and such guarantees, the “guarantees”) to a Subsidiary Guarantee. The Notes and the guarantees are secured by a perfected, first priority security interest in all assets of the Company and the Guarantors to a Security Agreement and Intellectual Property Security Agreement.
The Warrants are exercisable at an exercise price of $0.756 per share of Common Stock at any time before the close of business on the day two years after their issuance and contain cashless exercise provisions.
The Notes, Warrants, and shares of Common Stock issuable upon conversion of the Notes and upon exercise of such Warrants (the “Underlying Securities”), have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and were issued and sold to an accredited investor in reliance upon the exemption from registration contained in Regulation D promulgated under the Securities Act. The Notes, Warrants and Underlying Securities may not be offered or sold in the absence of an effective registration statement or exemption from the registration requirements under the Securities Act. On the Initial Closing Date, the Company also issued a Warrant to its advisor equal to 8% of the aggregate number of shares of Common Stock issued by the Company upon conversion off$833,333.33 in principal amount of Notes at an exercise price of $.8316 per share of Common Stock.
Registration Rights Agreement
On November 27, 2019, in connection with the sale and issuance of the Notes and Warrants, the Company entered into a Registration Rights Agreements (the “Registration Rights Agreement”) with the Purchaser. Under the terms of the Registration Rights Agreement, the Company has agreed to file a resale registration statement with the SEC and to use commercially reasonable efforts to cause such registration statement to be declared effective within certain time frames. In addition, the Registration Rights Agreement provides the Purchaser with piggyback registration rights. Under certain circumstances, if the Company fails to meet its obligations under the Registration Rights Agreement, it would be required to pay liquidated damages.
The foregoing descriptions of the Purchase Agreement, the Notes, the Warrants, the Subsidiary Guarantee, the Security Agreement, the Intellectual Property Security Agreement, and the Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement, the Form of Note, the Form of Warrant, the Subsidiary Guarantee, the Security Agreement, the Intellectual Property Security Agreement, the Warrant to Purchase Common Stock, and the Registration Rights Agreement, which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, and 10.8, respectively, hereto and are incorporated herein by reference.
Item 1.01. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure provided under Item 1.01 is hereby incorporated by reference into this Item 1.01.
Item 1.01. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 is incorporated by reference into this Item 1.01.
On December 4, 2019, the Company released the press release furnished herewith as Exhibit 99.1.
* Filed herewith
Exactus, Inc. Exhibit
EX-10 2 ex10-1.htm SECURITIES PURCHASE AGREEMENT,…
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About EXACTUS, INC. (OTCMKTS:EXDI)

Exactus, Inc. (Exactus), formerly Spiral Energy Tech, Inc., is a life science company. The Company will develop and commercialize Point-of-Care (POC) diagnostics for measuring proteolytic enzymes in the blood based on a detection platform. The Company’s primary business focus will be the development and commercialization of the FibriLyzer and related technology licensed by Exactus. The Company’s products will employ a disposable test biosensor strip combined with a portable hand held detection unit that provides a result in approximately 30 seconds. The Company intends to file to gain regulatory approval and launch its products in the United States and Europe.

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