Item
8.01 Other Events
The
Board of Directors Approve Compensation Plans
On
June 8, 2018, the Board of Directors for the Company approved compensation plans for its Board of Directors pursuant to Article
III, Section 12 of the Company’s Bylaws and the applicable Wyoming statutes. Specifically, the Board of Directors approved
a payment of $31,000, and issuance of 124,000 shares of common stock in the Company to Brian Werner, with Mr. Werner abstaining
from the vote. The Board of Directors also approved a payment of $62,000 in compensation to Ken Hedrick, with Mr. Hedrick abstaining
from the vote, pursuant to not only the Bylaws and Wyoming statute, but also his Director Advisory Agreement disclosed in prior
filings by the Company.
Clarifications
Regarding Previously Issued Press Releases
In
May and June of 2018, as part of its ongoing internal review in setting up procedures to improve internal controls, the Board
of Directors conducted a review of press releases issued by Mr. Ogburn, as the former Chairman of the Board and Chief Executive
Officer, from March 1, 2017 through the present.
On
May 12, 2017, the Company published a press released titled “American Housing Income Trust, Inc., Approves Change of Company
Name and Symbol.” The press release stated that the Company had merged with IX Biotechnology Inc. (“IXB”) and
assumed IXB’s business relationships and land leases with Native American Indian Tribe Members. Mr. Ogburn had been quoted
as stating, “[IXB] had the foundation and beginning stages of the model in process, and together with the AHIT team and
its assets, we can see the vision through and become the largest CBD producer in the country.” The Board of Directors has
recently concluded that IXB might have had informal business relationships with “Native American Indian Tribe Members,”
but no actual existing contractual relationships. The Board of Directors is of the opinion that the subsequent disclosures from
August 7, 2017 and February 26, 2018 regarding the Farm Lease, and the inability of the Company to rely on the Farm Lease as a
binding farming agreement remains accurate as of the date of this filing.
On
June 5, 2017, the Company issued a press release titled “Corix Bioscience Announces Contract with Segra International, Inc,”
stating in pertinent part, that the Company had contracted with Segra International Inc. to plan and construct a state-of-the-art
tissue culture facility in Northern Nevada, and that the Company “…currently has over 200 acres of industrial hemp
contracted that will sold as both dry flower and refined into CBD oil this fall.” As a result of its internal investigation,
the Board of Directors has determined that: (1) the agreement between the Company and Segra International, Inc., did not close
and was not finalized, (2) the Company has not constructed a “tissue culture facility,” and (3) the Company, while
it intended to develop a fully integrated process of growing and manufacturing cannabinoids, did not have systems in place at
the time of this press release was issued. The Board of Directors advises that the public should not rely on these representations.
On
August 11, 2017, the Company issued a press release titled “Corix Bioscience Announces New Tissue Culture and Research Lab.”
The press release announced that the Company would be “…[moving] their tissue cell culture and research divisions
into a new 10,122 square foot laboratory in Carson City, Nevada on a three-year lease.” This disclosure is accurate and
the Company is current on its lease. However, the Company has not yet set up the requisite operations to, “…produce
over 3 million plantlets in the immediate future and set them up to double that in the second full year” or commence with
growing, at this time, as announced by Mr. Ogburn in the release.
In
addition, the August 11, 2017 press release, and the Form 8-K filed shortly thereafter, had disclosed the agreement between the
Company and Positively Green Organics (“PGO”). The Board of Directors has determined that, although significant negotiations
between Mr. Ogburn and PGO took place, the actual agreement previously disclosed has not been performed by the parties, and thus
any representation regarding joint operations with PGO cannot be relied upon at this time.
On
September 7, 2017, the Company issued a press release titled “Corix Enters California Cannabis Market Adding 3 Licenses.”
The Board of Directors has concluded that, while the Company and Brand E&B Investments, LLC engaged in negotiations regarding
the Company’s purchase of the licenses identified in the press release, the Board of Directors cannot, at this time, confirm
that the sale closed or the licenses transferred. As such, the Board of Directors advises that the public should not rely on the
representations in this press release.
On
October 5, 2017, the Company issued a press release titled “Corix Bioscience Inc. to Purchase 46,060 Square Foot Research
Facility.” The press release disclosed the agreement to purchase a facility in Carson City, Nevada with an expected closing
date of November 4, 2017. The Board of Directors has concluded, based on information currently available, that the Company has
no further purchase obligations under the purchase agreement disclosed earlier.
On
November 2, 2017, CFN Media issued a press release titled “Corix Looks to Standardize CBD for Athletes – CFN Media.”
The press release stated, in pertinent part, that the Company “…currently grows industrial hemp on a 160-acre hemp
farm in Genoa, Nevada that is expected to harvest 250,000 pounds of dry flower for extraction into oil, complemented by an 11,000
sq. ft. laboratory in Carson City, NV for genetic research and tissue culture. It's also under contract for a 46,000 sq. ft. building
in Carson City that will be used for R&D and cultivation of hemp year round, and leases a 21,500 sq. ft. cannabis research
grow facility in Adelanto, CA on nine acres.” As a result of its internal investigation, the Board of Directors has determined
that, at the time of this press release, the Company: (1) was not growing industrial hemp or cannabis, (2) had not purchased or
began constructing the “genetic research and tissue culture” laboratory identified in this press release, and (3)
did not hold any valid licenses to cultivate, handle, transport, process, distribute, export, or sell hemp or cannabis in Nevada
or any other state in the United States. As such, the Board of Directors advises that the public should not rely on the representations
in this press release.
On
November 17, 2017, the Company issued a press release titled “Corix Bioscience to Co-Sponsor #90 NASCAR Xfinity Car with
Joe DiMaggio Children’s Hospital.” The press release stated, in part, that, “Champ RX, a professional boxer-owned
company with over 30 title belts between them has partnered with Corix and will have several Boxers and MMA Fighters on hand to
tour DiMaggio Children's Hospital the morning of the race.” As a result of its internal investigation, the Board of Directors
has determined that, at the time of this press release, the Company had not officially partnered with Champ RX, i.e. had entered
into a definitive operating agreement or related agreement memorializing the parties’ relationship; however, the Board of
Directors has concluded that Mr. Ogburn was indeed negotiating the terms of the operating agreement with Champ RX on behalf of
the Company. This Operating Agreement was eventually executed on December 14, 2017. Additionally, the Company’s representation
in the press release that, at the time, it was “growing” hemp or cannabis, or operated a laboratory and processing
center in Carson City, Nevada, was not accurate.
On
January 16, 2018, CFN Media issued a press release titled “Global CBD Market Yields Great Opportunities – CNF Media.”
The press release stated, in part, that the Company was “…[aiming] to become a leader in the industry with existing
hemp farming operations and extensive distribution capabilities.” Though the Company believes that this was indeed the intent
of the Company at the time of the release, the Company had not been growing, manufacturing, or processing industrial hemp or cannabis,
and did not have an “existing” hemp farming operation, though the Company had entered into a lease for the Carson
City facility.
On
January 18, 2018, CFN Media issued a press release titled “Global CBD Market Yields Great Opportunities – CNF Media.”
The press release stated, in part, “[The Company] today announced that it will joint venture with ChampRX for its products.”
As a result of its internal investigation, the Board of Directors has determined that, while the Company has not entered into
an actual “joint venture agreement” with ChampRX; rather, the Company had purchased twenty-five percent (25%) of the
issued and outstanding units in ChampRX. This Operating Agreement was eventually executed on December 14, 2017 (enclosed herein)
and just recently produced to the Board of Directors.
On
February 6, 2018, the Company issued a press release titled “Corix Bioscience Quarterly Shareholder Update.” The press
release stated, in part:
Corix
Bioscience Inc. (OTCQB: CXBS) has had a tremendous quarter to end the year of 2017, prompting this announcement to communicate
current successes and future milestones.
Highlights
from the past 3 months include:
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Rewarding
harvest of industrial hemp in Carson City, Nevada
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•
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Purchased
$1mm worth of processing equipment fully in cash (without financing)
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•
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Acquired
Pharmaceutical Development Corp LTD in Lesotho, South Africa
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Shipped
our first set of samples to Switzerland and began marketing in the European market
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Created
Joint Venture with ChampRX
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With
top leading industry experts on their agricultural team and advanced seed genetics, Corix had a banner late harvest in Carson
City, Nevada to close out 2017. Corix was able to excel in both quality and quantity in the cultivation of industrial hemp. The
rewarding harvest not only proved their capabilities in cultivation, but the substantial inventory also became a promising start
for 2018.
Corix
has also scaled their manufacturing divisions with major equipment purchases and upgrades. Corix has obtained over $1mm worth
of proprietary and agricultural equipment, all paid in full and without financing. These upgrades include a new trimming line,
a new packaging line, stripping equipment, drying and preservation systems, post-processing equipment for CBD isolate, and Genius
extraction equipment. Machinery of this scale paired up with their strong raw inventory, Corix has increased their overall capacity,
will allow them to complete demands they could not fulfill in the past, and facilitate the continuous new incoming orders.
In
terms of international sales, Corix Bioscience spent the last three months of 2017 paving way for the global market. By acquiring
Pharmaceutical Development Corp LTD in South Africa, Corix has attained the first license issued by the Government of Lesotho
that enables them to import and the export cannabis and cannabis resin in various forms. Corix also has an export license that
allows them to export cannabis and CBD products to approximately 30 plus different countries in the EU, Canada, Australia, Mexico,
Brazil and New Zealand. In the past quarter, Corix also shipped out their first sample order to Switzerland, as a first step into
the European market.
Corix
also solidified their joint venture with ChampRX for its products. Corix will be their official CBD manufacturer and a 25% equity
holder in ChampRX. Both companies will be ring sponsors for Shannon Briggs's next title fight. Corix will also have access to
the marketing for ChampRX and its partners. Under the terms of the agreement, Corix will provide the science and manufacturing
behind the products and ChampRX will market and promote the product.
ChampRX
is composed of several current and former boxers. This includes many title holders including 2X Heavyweight Champion Shannon Briggs,
2X Heavyweight Champion Chris Byrd with several other Olympic and Boxing Champions including Lamon Brewster, Montell Griffin and
Ray Mercer, each multiple boxing champion. For more information visit their website at ChampRXCBD.com.
Corix
has had a promising fourth quarter with strong synergies carrying into 2018. Corix is more than well-prepared for the new year
and is well on their way to achieve their ultimate goals.
As
a result of its internal investigation, the Board of Directors has determined that, at the time of this press release, the Company
was not growing, manufacturing, or processing industrial hemp or cannabis, and did not have an “existing” hemp farming
operation, though the Company had entered into a lease for the Carson City facility. The Board of Directors could not confirm
that the Company harvested any plants from the Carson City facility in the fall of 2017. Additionally, as disclosed above, the
partnership with ChampRX was not finalized at the time of this press release; however, the Operating Agreement was entered into
on December 14, 2017.
On
March 8, 2018, the Company issued a press release titled “Corix Bioscience Inc. Announces Its Strategic Entry into California
Cannabis Market.” The press release stated, in part:
Corix
Bioscience Inc. (OTCQB: CXBS), an emerging developer of proprietary cannabis and industrial hemp strains earmarked specifically
for use in important healthcare applications, today announced that it has executed a definitive agreement to acquire a 60% interest
in OG Group LLC, positioning Corix to play a leading role in the California cannabis market.
Corix
CEO Michael Ogburn commented, “We are pleased to team up with the highly-regarded industry leaders at OG Group. This acquisition
allows us to put licenses Corix already owns to significant use. OG Group will be utilizing more than $5 million worth of specialty
processing equipment to service customer orders. Together we expect to positively impact the entire ecosystem of this business.”
OG
Group is purchasing a principal operations facility in Adelanto, California. The building has 1,800 square feet immediately available
for processing activities, with substantial room for enlarging to meet customer needs. The real estate also includes ~44,000 square
feet that could be used for future cultivation. OG Group is funding all of the purchase and start-up costs of the Adelanto facility
and real estate.
CEO
Ogburn noted, “The legalization of medicinal and adult-use cannabis in California this year, paired with the cannabis licenses
(cultivation, processing and distribution) that Corix holds in Adelanto, makes this acquisition particularly fortuitous and timely.
In the context of a current highly-fragmented California market, the acquisition of OG Group could, within a short period of time,
result in Corix being the leading cannabis extractor in the state.”
The
all-stock acquisition of 60% of OG Group calls for 17,500,000 Corix common shares to be issued to the OG Group shareholders; with
5,000,000 shares issued upon closing the transaction, and 2,500,000 shares to be issued on each subsequent purchase anniversary
for five years thereafter.
As
a result of its internal investigation, the Board of Directors has determined that the Company and OG Group entered into a Stock
Exchange Agreement, as previously disclosed; however, the Company has not closed due to ongoing due diligence. The Stock Exchange
Agreement will not close until due diligence is complete and an attorney opinion letter is obtained regarding OG Group’s
performance of the conditions precedent under the Stock Exchange Agreement. The Board of Directors advises that the public should
not rely on the representations in this press release to the extent it states that the acquisition of OG Group has closed.
On
March 20, 2018, the Company issued a press release titled “Corix Bioscience Announces Arrival of OG Group Personnel and
Equipment in Adelanto; Installation of Custom-Made Extraction Systems Underway; Operating Team Targets Leadership Role in California
Cannabis Industry.” The press release stated, in part:
Corix
Bioscience Inc. (OTCQB: CXBS), an emerging developer of proprietary cannabis and industrial hemp strains earmarked specifically
for use in important healthcare applications, today announced that the relocation of OG Group personnel and equipment from Colorado
to California is proceeding smoothly.
Corix
CEO Michael Ogburn stated, “We are excited that an iconic industry ‘Dream Team’ will be a vital part of Corix
Bioscience going forward. I am confident that our joint efforts will result in significant value creation for all of our stakeholders.”
Subject
to approval of its standard operating plan by the City of Adelanto, OG Group expects to be functioning near full strength in two
to three weeks.
OG
Group president Tim Chan said, “In 2018, the California cannabis industry should generate over $7 billion in revenue. Cultivators
and distributors know that we have an unparalleled reputation for excellence with respect to the work we do and the results we
achieve. We fully expect OG Group will be the leading cannabis extractor in the state this year.”
Anthony
Smith, OG Group chief operating officer, commented, “The cannabis industry has not yet seen the unique technology we will
utilize at scale in our Adelanto facility. The true extent of what we can do will soon be apparent, and we look forward to a robust
demand for our array of value-added services.”
As
a result of its internal investigation, as stated above, the public should not rely on any representation that there is a definitive
operating agreement between the Company and OG Group, even though the parties have been in ongoing negotiations, and Mr. Werner
has met with the principals of OG Group who have confirmed their intent in entering into a definitive operating agreement this
quarter.