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PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following information sets forth the names, ages, and positions of our current directors and executives as of April 18, 2022.
Name |
|
Age |
|
Present
Positions |
Leslie
Buttorff |
|
64 |
|
CEO
and Chairman |
Lawrence
J. Wert |
|
65 |
|
Director |
Janice
Nerger |
|
61 |
|
Director |
Nick
Cavarra |
|
57 |
|
Senior
Vice President Marketing and Sales |
Nathan
Berman |
|
34 |
|
Controller |
James
Baumgartner |
|
57 |
|
Chief
Science Officer and Quality Control |
Jordan
Buttorff |
|
34 |
|
Chief
Information Officer |
Nick
Buttorff |
|
31 |
|
General
Manager |
Directors
Our
Board is currently comprised of three members. The following biographical information discloses each director’s age, business experience
and other directorships held during the past five years. It also includes the experiences, qualifications, attributes and skills that
led to the conclusion that the individual should serve as our director.
Leslie
Buttorff is our Chief Executive Officer and director since June 30, 2021. Ms. Buttorff has been the Chief Executive Officer of Panacea
Life Sciences, Inc., a company which manufactures and develops pharma-grade hemp-related products since 2017. In addition, Ms. Buttorff
has been the Chairman of the Board of Quintel-MC, Inc. a company that focuses on SAP ERP (Enterprise Resource Planning) implementations
since 2002. Ms. Buttorff is also a member of the Boards of Active Youth Network (providing revenue and enabling information for sports
teams, high schools and clubs) and JobZology (a CSU spinoff focused on matching people and jobs for employers). Ms. Buttorff was appointed
to our Board as a result of her knowledge of the business, ownership and position with the Company.
Lawrence
J. Wert was appointed to our Board on April 29, 2020. Mr. Wert has over 40 years in broadcasting. Mr. Wert served as the President
of Broadcast Media for Tribune Media Company from 2013 through September of 2019. Mr. Wert previously served on the NAB TV Board of Directors,
Fox Board and the CBS Board of Governors. In 2017, Mr. Wert was named “Broadcaster of the Year” by the Illinois Broadcaster’s
Association. Currently, he serves on the Board of Directors for several charities, including the Children’s Brittle Bone Foundation,
Catholic Charities, the Chicagoland Chamber of Commerce and the 100 Club. Mr. Wert is a member of the Governing Board of Gilda’s
Club of Chicago, an advisor to the Chicago Chapter of Make-A-Wish Foundation and an honorary board member of RAINBOWS, an organization
that helps children cope with loss. In 2018, Mr. Wert was inducted into the Chicago Catholic League Hall of Fame. Mr. Wert also sits
on Board of Trustees for Fenwick High School in Oak Park, Ill. Mr. Wert was appointed to our Board as a result of his prior experience
with Exactus, Inc.
Janice
Nerger, age 60, was appointed to our Board on October 17, 2021. Dr. Nerger was previously a member of the Panacea Life Sciences Board
from 2019. Dr. Janice L. Nerger was named Dean of the College of Natural Sciences at Colorado State University in 2010. Dr. Nerger
is the sponsor of the Panacea Life Sciences Cannabinoid Laboratory at CSU. Dr. Nerger is internationally recognized for her research
on human vision, in particular on the neurophysiological mechanisms underlying color perception. Her research has resulted in numerous
publications, presentations, and recognition from the Rank Prize Foundation, the National Research Council, and the National Science
Foundation. Dr. Nerger also instituted the first Professional Science Master’s degree in the State of Colorado and the first interdisciplinary
undergraduate degree at Colorado State University. In 2016, Dr. Nerger was named a “Woman of Influence” and awarded the Dr.
Joan King International Woman of Vision by the Colorado Organization of Women of Influence. Dr. Nerger also currently serves as the President
of the Council of Colleges of Arts and Sciences. Dr. Nerger was appointed to our Board for her knowledge in the industry and sponsor
of the CSU Cannabinoid Lab.
Executive
Officers
The
following provides certain biographical information with respect to each executive officer of the Company who is not a director.
See
“Directors” above for Ms. Buttorff’s biographical information.
Nick
Cavarra is our Senior Vice President Marketing and Sales since 2019. Mr. Cavarra brings over 25 years of management, leadership and
sales experience at the local and national level in the broadcast/digital media, software and web/mobile development marketplace. His
previous career positions include C-Level management experience with AYN and Zapotech Inc., and senior account management positions at
KUSA-TV and KMGH-TV.
Nathan
Berman is our Controller since June 30, 2021. Mr. Berman works as the controller for Panacea Life Sciences since December, 2019.
Prior to Panacea, Mr. Berman worked for Media Audits International providing audit and management services on behalf of large broadcast
corporations. Prior to this, Mr. Berman began his career in the banking industry while pursuing his CFA designation through the CFA Institute.
James
“Jamie” W. Baumgartner is our Chief Science Officer and Quality Control since 2017. Mr. Baumgartner has recently lead
two science-based businesses resulting in marked increases in revenue, productivity and profitability. Mr. Baumgartner adds over 20 years
of drug discovery experience to PLS and reinforces the company’s commitment to its foundation in scientific research and development
in the healthcare and biotech industries.
Jordan
Buttorff is the Chief Information Officer at Panacea Life Sciences since March 2020. Mr. Buttorff has also obtained several professional
certifications for SAP BASIS and Technical Management since 2005.
Nick
Buttorff is our General Manager since March 2020. Mr. Buttorff in several capacities at Panacea Life Sciences, most notably in the
Human Resources, Payroll, Regulatory Compliance, Business Administration, and Property Management functional areas. Since 2010, Mr. Buttorff
works for Quintel-MC, Inc. as a SAP consultant. Mr. Buttorff is a certified SAP consultant and Human Resources Professional (SHRM-CP).
Employees
and Contractual Arrangements
As
of April 18, 2022, we employ management and support staff, chemists, extraction specialists, lab technicians order fulfillment and sales
executives. We are building our culture around a performance-based system, and unlike other CBD companies we offer our employees personal
time off (PTO) and health and dental benefits. We believe this is important in order to attract the best individuals for these roles.
We also have an outsourcing agreement with Canna Software, LLC (ERPCannabis solution based on SAP) to provide back-office operations
assistance in the financial, human resources, procurement and payroll and tax areas. We also have under contract ten sales territory
managers that have many sales reps reporting in each sales territory. Overall, we currently has over 30 individuals working under our
brand.
Family
Relationships
There
are no family relationships between or among the directors. There are family relationships between our CEO, her two sons, her brother
Nick Cavarra and her niece Lauren Cavarra.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director, executive
officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being
subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment
or decree, not subsequently reversed, suspended vacated, of any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being
found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Audit
Committee Financial Expert
Our
Board has determined that Leslie Buttorff is qualified as an “audit committee financial expert”, as that term is defined
under the rules of the SEC and in compliance with the Sarbanes-Oxley Act of 2002.
Code
of Ethics
On
January 9, 2019, our Board adopted a Code of Business Conduct and Ethics applicable to all of our directors, executive officers, and
employees.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our directors, executive officers, and persons who beneficially own more than 10% of our common stock
to file initial reports of ownership and changes in ownership of our common stock and other equity securities with the SEC. These individuals
are required by the regulations of the SEC to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of
the copies of the forms furnished to us, and written representations from reporting persons, we believe that all filing requirements
applicable to our officers, directors and 10% beneficial owners were complied with during 2020 Fiscal Year except the Form 4 for Nathan
Berman granting stock options, a Form 4 for Alvaro Daniel Alberttis granting stock options and a Form 4 for Andrew Johnson granting stock
options, which were not filed in a timely manner.
Item
11. Executive Compensation
The
following information is related to the compensation paid, distributed or accrued by us for the fiscal years ended December 31, 2021
and 2020 to our Chief Executive Officer (principal executive officer) serving during the last fiscal year and the two other most highly
compensated executive officers serving at the end of the last fiscal year whose compensation exceeded $100,000 (the “Named Executive
Officers”). Share amounts and stock prices have been adjusted to give effect to the 1-for-28 reverse stock split consummated on
October 25, 2021.
Summary
Compensation Table
Name and Principal Position (a) | |
Year (b) | |
Salary
($)(c) | |
Stock Awards ($)(e) |
|
Total ($)(j) | |
| |
| |
| |
|
|
| |
Leslie Buttorff (1) | |
2021 | |
| 380,000 | |
| 0 |
|
| 380,000 | |
Chief Executive Officer | |
2020 | |
| 0 | |
| 0 |
|
| 0 | |
| |
| |
| | |
| |
|
| | |
Alvaro Daniel Alberttis (2) | |
2021 | |
| 0 | |
| 0 |
|
| 0 | |
Former Principal Executive Officer and Chief Operating Officer | |
2020 | |
| 0 | |
| 0 |
|
| 0 | |
| |
| |
| | |
| |
|
| | |
Lawrence Wert (3) | |
2021 | |
| 0 | |
| 0 |
|
| 0 | |
Former Principal Executive Officer | |
2020 | |
| 0 | |
| 0 |
|
| 0 | |
| |
| |
| | |
| |
|
| | |
Emiliano Aloi (4) | |
2021 | |
| 0 | |
| 0 |
|
| 0 | |
Former Interim Chief Executive Officer | |
2020 | |
| 62,308 | |
| 0 |
|
| 62,308 | |
| |
| |
| | |
| |
|
| | |
Andrew Johnson (5)
Former Principal Accounting Officer and Chief Strategy Officer | |
2021
2020 | |
| 0
75,962 | |
| 0
122,500 |
|
| 0
198,462 | |
(1) |
Ms.
Buttorff is our Chief Executive Officer and our Principal Financial Officer. Compensation is all deferred. |
(2) |
Mr.
Alberttis resigned as our Chief Executive Officer and Chief Operating Officer on June 26, 2021. Mr. Alberttis was awarded 89,286
stock options in 2021 prior to the consummation of the share exchange. As a result of the reverse merger accounting in connection
with the share exchange, the dollar value of the stock options issued to Mr. Alberttis can not be determined. |
(3) |
Mr.
Wert was appointed as our Principal Executive Officer on June 28, 2021 and resigned upon the consummation of the share exchange.
Does not include equity compensation for services rendered as a director. |
(4) |
Mr. Aloi resigned as our interim Chief Executive Officer
on December 8, 2020. |
(5) |
Mr.
Johnson was appointed as our Principal Accounting Officer on June 28, 2021 and Chief Strategy Officer on March 11, 2019, and
resigned upon the consummation of the share exchange. Reflects the dollar value of a restricted stock award issue by
Exactus in 2020. |
Outstanding
Awards at Fiscal Year End
Listed
below is information with respect to unexercised options that have not vested and equity incentive plan awards for each named executive
officer outstanding as of December 31, 2021. Share amounts and stock prices have been adjusted to give effect to the 1-for-28 reverse
stock split consummated on October 25, 2021:
Outstanding
Equity Awards At Fiscal Year-End
Name (a) | |
Number
of Securities Underlying
Unexercised Options
(#) Exercisable
(b) | | |
Number
of Securities Underlying Unexercised Options (#) Unexercisable (c) | | |
Equity
Incentive Plan
Awards: Number
of Securities Underlying
Unexercised Unearned
Options (#) (d) | | |
Option Exercise
Price ($)(e) | | |
Option Expiration
Date (f) | | |
Number
of Shares or Units of Stock That Have Not Vested (#) (g) | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Leslie Buttorff | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Alvaro Daniel Alberttis(1) | |
| 89,286 | | |
| - | | |
| | | |
| 0.70 | | |
| 1/22/2023 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Lawrence Wert(2) | |
| - | | |
| - | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Andrew Johnson(1) | |
| 50,000 | | |
| 50,000 | | |
| | | |
| 2.80 | | |
| 6/30/2026 | | |
| 50,000 | |
| |
| 446 | | |
| | | |
| - | | |
| 8.96 | | |
| 1/15/2029 | | |
| | |
| |
| 1,116 | | |
| | | |
| 558 | | |
| 26.88 | | |
| 1/15/2029 | | |
| | |
| |
| 4,464 | | |
| | | |
| 744 | | |
| 15.68 | | |
| 3/12/2029 | | |
| | |
(1) |
Awarded prior to the
consummation of the share exchange. One-half of the stock options vested upon the effective date of the 1-for-28 reverse stock split of
the Company’s common stock, and the remainder vests on June 30, 2022, subject to continued service as a director or consultant
of the Company. The exercise price of the stock options is $2.80 per share. As a result of the reverse merger accounting in connection
with the share exchange, the dollar value of the stock options issued to Mr. Alberttis and Mr. Johnson prior to, and in connection
with, the consummation of the share exchange cannot be determined. |
(2) |
Mr. Wert received stock
options solely in his capacity as a director of the Company. |
Compensation
Discussion and Analysis
With
regard to our full-time executive officer, the goal of the salary component of our compensation policy is to provide reasonable compensation
for their full-time service within the constraints faced by a rapidly developing business with significant cash needs for its planned
expansion. Equity grants for our full-time executive officers are currently under review by the compensation committee. The goal of our
anticipated equity grants will be to provide an appropriate mixture of short term and long-term incentives to increase shareholder value.
On
December 31, 2021 we entered into an amended Employment Agreement with Leslie Buttorff (the “Employment Agreement) pursuant to
which Ms. Buttorff serves as our Chief Executive Officer for an initial term of July 1, 2021 to December 31, 2024. Under the Employment
Agreement, Ms. Buttorff receives an annual base salary of $380,000. Ms. Buttorff is also entitled to receive (i) a sales commission of
2% of revenue from sales generated by Ms. Buttorff after revenue exceeds $500,000 for three consecutive months, (ii) an award of $2.2
million of shares of common stock upon approval of our common stock for listing on The Nasdaq Capital Market prior to expiration of the
term of the Employment Agreement, and (iii) an annual cash performance bonus of up to 100% of her base salary based on the achievement
of performance metrics for the applicable fiscal year to be set by our Board. To date, Ms. Buttorff has not taken a salary and payments
have accrued commencing in January, 2021.
Director
Compensation
Compensation
of Directors Table
The
following table shows the compensation paid during the year ended December 31, 2021 to our non-employee directors.
Name | |
| | |
Stock Awards ($) |
| |
All Other Compensation ($) | | |
Total ($) | |
| |
| | |
|
| |
| | |
| |
Lawrence J. Wert | |
| (a) | | |
| 0 |
| |
| 0 | | |
| 0 | |
Board Member | |
| | | |
| |
| |
| | | |
| | |
John Price | |
| (b) | | |
| 0 |
| |
| 0 | | |
| 0 | |
Former Board Member | |
| | | |
| |
| |
| | | |
| | |
Julian Pittam | |
| (c) | | |
| 0 |
| |
| 0 | | |
| 0 | |
Former Board Member | |
| | | |
| |
| |
| | | |
| | |
(a)
Mr. Wert was awarded 1,000,000 options prior to the consummation of the share exchange.
One-half of the stock options vested upon the effective date of a 1-for-28 reverse stock split of the Company’s common
stock, and the remainder vests on June 30, 2022, subject to continued service as a director or consultant of the Company. The
exercise price of the stock options is $2.80 per share. Mr. Wert received 125,000 shares of restricted stock during 2021.
As a result of reverse merger accounting in connection with the share exchange, the dollar value of stock awards and stock options awarded
to Mr. Wert prior to, and in connection with the consummation of the share exchange cannot be determined.
(b)
Mr. Price was awarded 150,000 stock options
prior to the consummation of the share exchange. One-half of the stock options vested upon the effective date of the 1-for-28
reverse stock split of the Company’s common stock, and the remainder vests on June 30, 2022, subject to continued services as
a director or consultant of the Company. The exercise price of the stock options is $2.80 per share. Mr. Price received 89,286
shares of restricted stock in 2021. Mr. Price resigned from the Board on June 26, 2021. As a result of reverse merger accounting in
connection with the share exchange, the dollar value of stock awards and the stock options awarded to Mr. Price prior to, and in
connection with the consummation of the share exchange cannot be determined.
(c)
Mr. Piitam received 53,571 shares of restricted stock during 2021. Mr. Pittam resigned from the Board on June 30, 2021. As a result of
reverse merger accounting in connection with the share exchange, the dollar value of stock awards awarded to Mr. Pittam prior to, and
in connection with the consummation of the share exchange cannot be determined.
Equity
Awards At Year End
None.
Option
Exercises and Stock Vested
Our
named executive officers did not exercise any stock option awards during the year ended December 31, 2021.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The
following table sets forth information as of April 18, 2022, regarding the number of shares of our common stock beneficially owned by
each director, each named executive officer and by all directors and executive officers as a group. Unless otherwise noted, each shareholder’s
address is 5910 S. University Blvd, Suite C18-193, Greenwood Village, CO 80121, and each shareholder has sole voting power and investment
power with respect to securities shown in the table below.
Title of class | |
Name of beneficial owner | |
Amount and Nature of Beneficial Ownership (1) | | |
Percent of Class (1) | |
Named Executive Officers: | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Common Stock | |
Leslie Buttorff (2) | |
| 4,666,503 | | |
| 31.2 | % |
| |
| |
| | | |
| | |
Common Stock | |
Nathan Berman (3) | |
| 26,624 | | |
| * | |
| |
| |
| | | |
| | |
Directors: | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Common Stock | |
Janice Nerger (4) | |
| 70,994 | | |
| * | |
| |
| |
| | | |
| | |
Common Stock | |
Lawrence J. Wert (5) | |
| 807,868 | | |
| 2.1 | % |
| |
| |
| | | |
| | |
Common Stock | |
All directors and executive officers as a group (4 persons) (6) | |
| 5,043,564 | | |
| 33.7 | % |
| |
| |
| | | |
| | |
5% Stockholders: | |
| |
| | | |
| | |
Common Stock | |
Quintel-MC Incorporated (7) | |
| 4,047,054 | | |
| 27. 0 | % |
Common Stock | |
22nd Century Group Inc. (8) | |
| 3,250,573 | | |
| 21.7 | % |
(1) |
Applicable
percentages are based on 14,965,317 of common stock outstanding as of the April 18, 2022, excluding securities held by or for the
account of the Company. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment
power with respect to securities. A person is deemed to be the beneficial owner of securities that can be acquired by such person
within 60 days after April 18, 2022 whether upon the exercise of options, warrants or conversion of notes. Unless otherwise indicated
in the footnotes to this table, we believes that each of the stockholders named in the table has sole voting and investment power
with respect to the shares of common stock indicated as beneficially owned by them. This table does not include any unvested stock
options except for those vesting within 60 days. |
(2) |
Ms.
Buttorff is our Chief Executive Officer, Chief Financial Officer and director. Includes 4,047,054 shares of common stock held by
Quintel-MC Incorporated. Ms. Buttorff is the President of Quintel-MC, Incorporated. |
(3) |
Mr.
Berman is our Controller. Includes 8,875 vested options. |
(4) |
Ms.
Nerger is a director. |
(5) |
Mr.
Wert is a director. Includes 500,000 vested options. |
(6) |
Directors
and Executive Officers as a group. This amount includes ownership by all directors and all current executive officers including those
who are not Named Executive Officers under the SEC’s disclosure rules. |
(7) |
Ms. Buttorff is the President of Quintel-MC Incorporated.
Address is 5910 South University Suite C18-193, Greenwood Village, CO 80121. |
(8) |
22nd
Century Group Inc. Based on Schedule 13G filed on July 9, 2021. Address is 500 Seneca Street, Suite 507, Buffalo NY 14204. |
Item
13. Certain Relationships and Related Transactions, and Director Independence
Set
forth below is the description of transactions since January 1, 2020, to which the Company has been a party, in which the amount involved
exceeded $120,000, and in which any of our directors, executive officers, beneficial owners of 5% or more of our Common Stock and certain
other related persons had a direct or indirect material interest, other than compensation arrangements described in this Information
Statement under “Executive Compensation” or “Director Compensation.”
On
January 22, 2021, the Company granted 392,857 two-year options exercisable at $0.70 per share to certain officers and directors,
including 125,000 options to Larry Wert, a director, 53,571 options to Julian Pittam, then director, 89,286 options
to Daniel Alberttis, then director and Chief Operating Officer, and 125,000 options to Andrew Johnson, then Chief Strategy Officer.
Subsequently, at a meeting on March 31, 2021 several directors reviewed the January grants to three of the insiders and sought to negate
these option awards in order to achieve two stated goals: to allow the directors to vote a sufficient number of shares required to approve
a matter purportedly requiring additional votes to achieve a majority under Nevada law, and to correct a mistake in the
January action which was claimed to have unintentionally awarded options instead shares of Common Stock. The directors present thereupon
granted to three directors a total of 357,143 shares of Common Stock as follows: 89,286 shares to Alvaro Daniel
Alberttis, 125,000 shares to Larry Wert, and 53,571shares to Julian Pittam, and to make a new award of 89,286 shares
to then director John Price and directed the Company’s transfer agent to issue such shares.
On
June 30, 2021, the Company entered into the Share Exchange with PLS, pursuant to which it issued shares of the Company’s Common
Stock and Preferred Stock to former PLS shareholders, including Leslie Buttorff, our Chief Executive Officer and director and the other
Majority Shareholders which are entities she controls. Following the Share Exchange, Ms. Buttorff, received 599,898 shares of
Common Stock, Quintel received 11,368,482 shares of Common Stock, 1,000,000 shares of Series C and 10,000 shares of Series C-1,
and J&N received 10,000 shares of Series D. The Series C, Series C-1 and Series D together convert into approximately 17.8% of the
Company’s Common Stock outstanding as of September 20, 2021. The Series C has a liquidation preference of $6.046 per share,
is convertible at the rate of 2.289 shares of Common Stock per share and through December 31, 2023 has the option to participate
in the recovery by the Company of certain assets. In order to avail herself of the rights, the holder can cause the Company to use the
cash generated by the assets and repurchase Series C at a price equal to the liquidation preference per share, subject to the Company
maintaining an agreed upon level of net assets. The Series C-1 has a liquidation preference of $281.25 per share and is convertible at
the rate of 106.491 shares of Common Stock for each share of Series C-1. The Series D has a liquidation preference of $430 per
share and is convertible into Common Stock at the rate of 162.813 shares of Common Stock per share. The Series C, Series C-1 and
Series D also vote on an as converted basis.
On
June 30, 2021 PLS received a loan from Quintel-MC Incorporated, an affiliate of the Company’s CEO, in exchange for a 12%
demand promissory note for $4,062,714 with a maturity date of December, 2023 (the “Quintel Note”). The Quintel Note was
secured by a pledge of certain Common Stock owned by PLS. On June 30, 2021, PLS issued the Company’s CEO, Ms. Buttorff,
a 10% promissory note in the amount of $1,624,000 with a maturity date of December 31, 2022 (the “Buttorff Note”). The
Buttorff Note was also secured by a pledge of certain common stock owned by PLS.
On
June 30, 2021, PLS entered into a Promissory Note Exchange Agreement with J&N, 22nd Century Group, Inc. who as a result of the Share
Exchange became a 5% shareholder of the Company (“XXII”) and 22nd Century Holdings, LLC pursuant to which, among other things
(i) PLS Series B Preferred Stock held by XXII converted to Exactus Common Stock, (ii) $500,000 of XXII convertible debt was converted
to Exactus Common Stock, (iii) PLS sold to XXII the real property and improvements located in Delta County, Colorado, and comprised of
approximately 234.394 acres of land, and PLS received a right to acquire 10 acres of the land for its own use, for the agreed
upon amount of $2,200,000 allocated as follows: (A) $1,770,000 for the real property and improvements; and (B) $430,000 for the equipment,
machinery and other personal property owned by PLS, and (iv) J&N assumed a $4,300,000 note payable to XXII and received the Series
D in the Share Exchange.
The
Company issued Ms. Buttorff an additional line of credit note of $1,000,000 on June 30, 2021 which bears interest at the rate of 10%
per annum and matures in 2022. As of the date of this filing, more than $1.0 million has been borrowed by the Company.
On
February 4, 2020, we entered into a Supply and Distribution Agreement with HTO Holdings Inc., d/b/a Hemptown, USA. On March 28, 2020,
we amended the Supply and Distribution Agreement. Ceed2Med, LLC, our then largest shareholder, was also a significant investor in Hemptown
USA and is party to a distribution agreement.
Our
CEO is the owner of related parties Quintel-MC, Inc. and J&N Real Estate LLC. Quintel-MC, Inc. is a majority shareholder and supplier
of services and notes payables. J&N holds a note of Panacea and is the leaseholder for the laboratory in Golden.
Director
Independence
We
are not a “listed issuer” within the meaning of Item 407 of Regulation S-K and there are no applicable listing standards
for determining the independence of our directors. Applying the definition of independence set forth in Rule 4200(a)(15) of The Nasdaq
Stock Market, Inc., we believe that Dr. Janice Nerger and Larry Wert, are independent directors.
Item
14. Principal Accountant Fees and Services
The
following table presents the aggregate fees billed for each of the last two fiscal years by our independent registered public accounting
firm, RBSM LLP, in connection with the audit of our consolidated financial statements and other professional services rendered.
Year Ended: | |
Audit Services | | |
Audit Related Fees | | |
Tax Fees | |
Other Fees |
December 31, 2021 | |
$ | 165,000 | | |
| 23,678 | | |
n/a | |
n/a |
December 31, 2020 | |
$ | 100,700 | | |
| n/a | | |
n/a | |
n/a |
Audit
fees represent the professional services rendered for the audit of our annual consolidated financial statements and the review of our
consolidated financial statements included in quarterly reports, along with services normally provided by the accounting firm in connection
with statutory and regulatory filings or other engagements. Audit-related fees represent professional services rendered for assurance
and related services by the accounting firm that are reasonably related to the performance of the audit or review of our consolidated
financial statements that are not reported under audit fees.
Pre–Approval
Policy of Services Performed by Independent Registered Public Accounting Firm
The
Board policy is to pre–approve all audit and non–audit related services, tax services and other services. The independent
registered public accounting firm and management are required to periodically report to the full Audit Committee regarding the extent
of services provided by the independent registered public accounting firm in accordance with this pre–approval and the fees for
the services performed to date.