Item
3.02 Unregistered Sales of Equity Securities.
Auctus
Fund, LLC
On
July 25, 2016, Ecosciences, Inc., a Nevada corporation (the “
Company
”), closed on the issuance of a Convertible
Promissory Note, dated July 19, 2016 (the “
Issue Date
”), in the original principal amount of $56,750 (the “
Auctus
Note
”) to Auctus Fund, LLC, a Delaware limited liability company (“
Auctus
”), pursuant to which Auctus
funded $50,000 to the Company after the deduction of $6,750 of diligence and legal fees. The Company sold the Auctus Note to Auctus
pursuant to a Securities Purchase Agreement, dated as of July 19, 2016 (the “
Auctus
SPA
”), between the
Company and Auctus.
The
Auctus Note bears interest at the rate of 12% per annum and matures on April 19, 2017 (the “
Maturity Date
”).
Any amount of principal or interest on the Auctus Note which is not paid when due shall bear interest at the rate of twenty-four
percent (24%) per annum from the due date thereof until the same is paid (the “
Default Interest
”). The Company
has the right to prepay the Auctus Note with a premium of up to 150% of all amounts owed to Actus, depending upon when the prepayment
is effectuated. The Auctus Note may not be prepaid after the 180
th
day after the issue date.
All
principal and accrued interest on the Auctus Note is convertible into shares of the Company’s common stock at the election
of Actus at any time at a conversion price equal to the lesser of (i) a 50% discount to the lowest trading price of the common
stock during the 25 trading days prior to the Auctus Note being issued and (ii) the Variable Conversion Price which is a 50% discount
to the lowest trading price of the common stock during the 25 trading day period prior to conversion.
If
the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the Conversion Price is less than
$0.001, the principal amount of the Auctus Note shall increase by $15,000 and the Variable Conversion Price shall be redefined
to mean forty percent (40%).
The
Auctus Note contains default events which, if triggered and not timely cured, will result in default interest and penalties. The
Auctus Notes provides for “piggyback” registration rights for shares issuable upon the conversion of the Auctus Note.
The
foregoing description of the Auctus Securities Purchase Agreement and the Auctus Note contemplated thereby does not purport to
be complete and is subject to, and qualified in its entirety by reference to, the full text of the Auctus Securities Purchase
Agreement and the Auctus Note, which are attached as exhibits to this Current Report on Form 8-K and are incorporated herein by
reference.
The
issuance of the Auctus Note was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as
amended (the “
Securities Act
”) for the offer and sale of securities not involving a public offering. The Company’s
reliance upon Section 4(a)(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient;
(c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not
broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the
individual and the Company; and (f) the recipient of the Auctus Note was an “accredited investor” as defined under
Rule 501(a) of Regulation D promulgated under the Securities Act.
Adar
Bays, LLC
On
July 21, 2016, the Company closed a Securities Purchase Agreement (“
ADAR SPA
”) with ADAR BAYS, LLC, a Florida
limited liability company (“
ADAR
”), providing for the purchase of two Convertible Redeemable Notes in the aggregate
principal amount of $121,000 (the “
ADAR Notes
”), with the first note being in the amount of $60,500 (“
ADAR
First Note
”) and the second note being in the amount of $60,500 (“
ADAR Back End Note
”), each with
a 10% original issue discount (“
OID
”). ADAR First Note was funded, with the Company receiving $55,000, net
of the 10% OID. With respect to ADAR Back End Note, also with a 10% OID, ADAR issued a note to the Company in the amount of $55,000
to offset ADAR Back End Note, secured by ADAR Back End Note (“
Secured Note
”). The funding of ADAR Back End
Note is subject to certain conditions as described in ADAR Back End Note. ADAR is required to pay the principal amount of the
Secured Note in cash and in full prior to executing any conversions under ADAR Back End Note.
The
ADAR Notes may be converted by ADAR at any time into shares of Company’s common stock calculated at the time of conversion,
except for ADAR Back End Note, which requires full payment of the Secured Note by ADAR before conversions may be made, at a conversion
price equal to 50% of the average of the three lowest trading prices of the Common Stock as reported on the National Quotations
Bureau OTC Markets exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded
in the future (“
Exchange
”), for the twenty (20) prior trading days including the day upon which a Notice of
Conversion is received by the Company. In the event the Company experiences a DTC “Chill” on its shares, the conversion
price shall be decreased to 40% instead of 50% while that “Chill” is in effect. In no event shall the Holder be allowed
to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder
and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the Company.
The
ADAR Notes bear an interest rate of 12%, and are due and payable on July 19, 2017. Interest shall be paid by the Company in Common
Stock (“
Interest Shares
”). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid
principal balance of this Note to the date of such notice. The Secured Note bears interest at the rate of 12% per annum is payable
no later than March 19, 2017, unless the Company does not meet the “current information requirements” required under
Rule 144 of the Securities Act, in which case ADAR may declare the ADAR Back End Note to be in Default (as defined in that note)
and cross cancel its payment obligations under the Secured Note as well as the Company’s payment obligations under ADAR
Back End Note.
During
the first six months the ADAR First Note is in effect, the Company may redeem the ADAR First Note by paying to an amount equal
to 140% of the face amount plus any accrued interest. The ADAR First Note may not be prepaid after the six-month anniversary.
The ADAR Back End Note may not be prepaid, except that if the ADAR First Note is redeemed by the Company within 6 months of the
issuance date of the ADAR First Note, all obligations of the Company under the ADAR Back End Note and all obligations of ADAR
under the Secured Note will be automatically be deemed satisfied and such notes will be automatically be deemed cancelled and
of no further force or effect.
The
ADAR SPA and ADAR Notes contain certain representations, warranties, covenants and events of default including if the Company
is delinquent in its periodic report filings with the Securities and Exchange Commission, and increases in the amount of the principal
and interest rates under the Notes in the event of such defaults. In the event of default, at the option of ADAR and in ADAR’s
sole discretion, ADAR may consider the Notes immediately due and payable.
The
foregoing description of the terms of the ADAR SPA, ADAR First Note, ADAR Back End Note and the Secured Note do not purport to
be complete and are qualified in its entirety by the complete text of the documents attached as exhibits to this Current Report
on Form 8-K.
The
issuances of the ADAR Notes were made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act for the offer
and sale of securities not involving a public offering. The Company’s reliance upon Section 4(a)(2) of the Securities Act
in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction
by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous
public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the
negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient
of the ADAR Notes was an “accredited investor” as defined under Rule 501(a) of Regulation D promulgated under the
Securities Act.