As disclosed in the Current Report on Form 8-K filed by Exactus Inc. (the “Company”) on August 28, 2017 (the “August 8-K”), the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) on August 14, 2017 to which it agreed to sell certain 8% convertible promissory notes to Morningview Financial, LLC (the “Purchaser”).

On August 22, 2017, to the Securities Purchase Agreement and as disclosed in the August 8-K, the Company completed the issuance of an 8% convertible promissory note in an aggregate principal amount of $110,000 (the “Initial Note”) to the Purchaser. On September 27, 2017, to Securities Purchase Agreement and as disclosed in the October 8-K, the Company issued an 8% convertible promissory note in an aggregate principal amount of $27,500 to the Purchaser, with terms and conditions identical to the Initial Note.

The Company amended the Initial Note on October 3, 2017 (the “First Amendment to Initial Note”), as disclosed in the Current Report on Form 8-K filed by the Company on October 11, 2017 (the “October 8-K”), and on December 18, 2017 (the “Second Amendment to Initial Note”), as disclosed in the Current Report on Form 8-K filed by the Company on December 22, 2017.

On January 4, 2018, the Company further amended the Initial Note (the “Third Amendment to Initial Note”) to (i) increase the aggregate principal amount of the Initial Note to $125,000 and (ii) extend the date by which the Company is required to cause the Registration Statement (defined below) to become effective to February 1, 2018. The terms of the Initial Note, as amended, are described below.

The Initial Note is dated August 14, 2017 and provides the terms and conditions of the Company’s obligations to the Purchaser. The Initial Note bears interest at a rate of 8% per annum and will mature on August 14, 2018. After giving effect to the Third Amendment to Initial Note, the outstanding aggregate principal amount of the Initial Note is $125,000.

After giving effect to the Third Amendment to Initial Note, at any time on or after the earlier of (i) the date on which there is an effective registration statement filed by the Company with respect to the shares of the Company’s common stock into which the Initial Note is convertible or (ii) the 170th calendar day after the issue date of the Initial 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 Initial Note 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 Initial Note.

The following are events of default under the Initial Note that may result in the outstanding Initial Note becoming immediately due and payable in an amount equal to 150% (or in certain cases 200%) of the outstanding balance of the Initial Note (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 Initial Note, 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 Initial Note 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 Initial Note, and the breach continues for a period of 10 days;

●any representation or warranty of the Company made in the Initial Note 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 Initial Note;

●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 unstayed 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 Initial Note;

●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 Initial Note, in its 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 Initial Note is convertible (the “Registration Statement”) within 30 days of the issue date of the Initial Note or to cause the registration statement to go effective on or before February 1, 2018.

The Company has the right to prepay the Initial Note at any time until the 170th calendar day after the issue date of the Initial Note, in an amount equal to 135% of the principal amount of the Initial Note outstanding. The Company may not prepay the Initial Note after the 170th calendar day after the issue date of the Initial Note. The Company will be subject to a liquidated damages charge of 25% of the outstanding principal amount of the Initial Note if it effects certain exchange transactions in accordance with, based upon or related or 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 Initial Note grants 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 Initial Note.

Any amounts due and payable to the Purchaser under the terms of the Initial Note, 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 Initial Note and the underlying common stock issuable upon conversion of the Initial Note 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 Initial Note, the First Amendment to Initial Note, the Second Amendment to Initial Note, and the Third Amendment to Initial Note is a summary and is qualified in its entirety by reference the full Securities Purchase Agreement and Initial Note, which are attached as Exhibits 10.1 and 10.2, respectively, to the Company’s Current Report on Form 8-K filed with the Commission on August 28, 2017, the full First Amendment to Initial Note, which is attached as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on October 11, 2017, the full Second Amendment to Initial Note, which is attached as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on December 22, 2017, and the full Third Amendment to Initial Note, which is attached as Exhibit 10.5 to this Current Report on Form 8-K, each of which are incorporated herein by reference.

Exactus, Inc. Exhibit
EX-10.5 2 ex10-5.htm AMENDMENT #3 TO THE CONVERTIBLE PROMISSORY NOTE ISSUED ON AUGUST 14,…
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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.