8-K: Resonate Blends Reorganizes Share Exchange Agreement, Appoints New Directors

Resonate Blends, Inc. has reformed its share exchange agreement with Emergent Health Corp. into a share-for-asset structure and appointed two new directors to its board.

Summary

• Resonate Blends, Inc. has reformed its previous share exchange agreement with Emergent Health Corp. from a share-for-share structure to a share-for-asset structure.
• The original share exchange agreement, closed on March 14, 2024, involved Resonate issuing shares of Series F Convertible Preferred Stock to Emergent Health Corp. shareholders in exchange for their equity interests.
• The reformation, effective August 8, 2024, rescinded the initial share issuance and assignments, and instead, Resonate issued the same shares to Emergent Health Corp. in exchange for the capital stock of four subsidiaries: Evolutionary Biologics, Inc., Apollo Biowellness, Inc., Nanosthetic, Inc., and Nanogistics, Inc.
• This change means Resonate is no longer the controlling shareholder of Emergent Health Corp.
• Resonate plans to file a Form S-1 Registration Statement for the distribution of these shares to Emergent Health Corp. shareholders, with the cost borne by Resonate.
• On July 29, 2024, Sandy Lipkins resigned from the board of directors, stating no disagreements with the company's operations.
• Effective July 29, 2024, Jay Lucas and Bobby Carpenter were appointed as new directors.
• On June 20, 2024, the majority shareholder approved a change of the company's name to Apollo Biowellness, Inc., pending FINRA approval.

Sentiment

Score: 5

Explanation: The document contains both positive and negative elements. The reformation of the agreement and new director appointments are positive, but the need to restructure the initial agreement and the resignation of a director are concerning. The overall sentiment is neutral.

Positives

• The reformation of the share exchange agreement is intended to be more beneficial to all parties involved.
• The appointment of Jay Lucas and Bobby Carpenter brings new expertise to the board of directors.
• Jay Lucas has extensive experience in strategy consulting and private equity.
• Bobby Carpenter has a strong background in finance, real estate, and business.

Negatives

• The need to reform the initial share exchange agreement suggests potential issues with the original structure.
• The company will bear the cost of filing the Form S-1 Registration Statement for the distribution of shares to Emergent Health Corp. shareholders.
• The resignation of Sandy Lipkins, while stated to be without disagreement, creates a vacancy on the board.

Risks

• The timing of FINRA approval for the corporate name change is uncertain.
• The company will need to successfully integrate the newly acquired subsidiaries.
• The distribution of shares to Emergent Health Corp. shareholders is subject to regulatory approval and market conditions.

Future Outlook

The company intends to file a Form S-1 Registration Statement for the distribution of shares to Emergent Health Corp. shareholders at a yet-to-be-determined time in the future.

Management Comments

• Sandy Lipkins stated his resignation did not imply any dispute or disagreement with the company's operations, policies, or practices.

Industry Context

The restructuring of the share exchange agreement and the acquisition of the four subsidiaries suggests a strategic shift for Resonate Blends, potentially moving towards a more diversified portfolio of assets in the health and wellness sector. The appointment of new directors with experience in private equity and business development could indicate a focus on growth and value creation.

Comparison to Industry Standards

• Restructuring of agreements is not uncommon in the corporate world, especially when initial structures prove to be less beneficial than anticipated. Companies like Xometry and Canoo have also restructured agreements to better align with their strategic goals.
• The appointment of directors with diverse backgrounds is a common practice to enhance board expertise. For example, companies like Beyond Meat and Peloton have appointed directors with experience in various sectors to guide their growth.
• The acquisition of subsidiaries is a typical growth strategy, similar to how companies like Danaher and Roper Technologies have expanded their portfolios through strategic acquisitions.

Management Changes

Stakeholder Impact

• Shareholders may experience changes in the value of their holdings due to the restructuring and the distribution of shares.
• Employees of the acquired subsidiaries will become part of Resonate Blends, Inc.
• Customers of the acquired subsidiaries will now be served by Resonate Blends, Inc.

Next Steps

• The company will file a Form S-1 Registration Statement for the distribution of shares to Emergent Health Corp. shareholders.
• The company will await FINRA approval for the corporate name change to Apollo Biowellness, Inc.

Key Dates

Keywords

Share Exchange Agreement, Reformation, Emergent Health Corp, Board of Directors, Corporate Governance, Acquisition, Apollo Biowellness, Directors, Resignation, FINRA