UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 22, 2016
Enhance Skin Products Inc.
(Exact Name of Registrant as Specified in Charter)
| Nevada | 000-52755 | 84-1724410 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 50 West Liberty Street, Suite 880, Reno NV | 80246 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (416) 306—2493
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
SECTION 1 - REGISTRANT’S BUSINESS AND OPERATIONS
ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Effective January 22, 2016, Enhance Skin Products Inc. (the “Company”) entered into a Loan Agreement (Amendment 4) with Mercuriali Ltd. and Samuel Asculai. Mercuriali Ltd is a company controlled by Donald Nicholson, the Company’s President & CEO, and Dr Asculai is the Company’s Chairman and Chief Scientific Officer. This agreement amends loan agreements between the parties dated March 4, 2013, March 3, 2014 and September 29, 2015 and provides for an increase in the loan amounts by Mercuriali Ltd. and Samuel Asculai in the event no additional third party monies are received by the Company from US$45,000 to US$90,000. Upon certain conditions set out in the Loan Agreement (Amendment 4), the amounts so loaned by Mercuriali Ltd. and Samuel Asculai will be convertible into common shares of the Company at the lower of $0.0047753 or the conversion price at which the promissory note the Company issued to Vis Vires converts. The Vis Vires promissory note was included in the Company’s Form 8-K filed on June 25, 2015.
The Company is currently in the advanced stages of reformulating its first six products and revising its brand identity and packaging for the Visible Youth consumer and professional brand. In the opinion of the Board the additional loan amount increases the Company’s financial flexibility in the near term.
The foregoing description of the Loan Agreement (Amendment 4) does not purport to be complete and is qualified in its entirety by reference to the text of the Loan Agreement (Amendment 4), which is attached hereto as Exhibit 10.01.
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.03 - CREATION OF A DIRECT FINANCIAL OBLIGATION
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
SECTION 3 - SECURITIES AND TRADING MARKETS
ITEM 3.02 - UNREGISTERED SALES OF EQUITY SECURITIES
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference. The above securities were issued pursuant to the exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D promulgated thereunder.
SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
| 10.1 | Loan Agreement (Amendment 4) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Enhance Skin Products Inc. | ||
| By: | /s/ Donald Nicholson | |
| Donald Nicholson | ||
| President/CEO, Principal Executive Officer | ||
Dated: January 25, 2016
LOAN AGREEMENT (Amendment 4) made effective January 22, 2016 (the “Effective Date”) between Mercuriali Ltd., a limited company incorporated pursuant to the laws of England and Wales (hereinafter referred to as “Mercuriali”) and Samuel Asculai of the City of Toronto (hereinafter “Asculai”) and Enhance Skin Products Inc., a corporation incorporated pursuant to the laws of the State of Nevada (hereinafter referred to as “Enhance”)
WHEREAS Mercuriali, Asculai and Enhance are parties to a Loan Agreement dated March 4, 2013 (hereinafter the “Loan Agreement”), a Loan Agreement (Amendment 1) made effective September 20, 2013 (hereinafter “Amendment Agreement 1), a Loan Agreement (Amendment 2) made effective March 3, 2014 (hereinafter “Amendment Agreement 2) and a Loan Agreement (Amendment 3) made effective September 29, 2015 (hereinafter “Amendment Agreement 3);
AND WHEREAS Enhance and Vis Vires Group Inc. are parties to a Convertible Promissory Note dated June 19, 2015 (“The Vis Vires Promissory Note”) and a Securities Purchase Agreement dated June 19, 2015 (“The Vis Vires Securities Purchase Agreement”);
AND WHEREAS the parties wish to amend the Loan Agreement, Amendment Agreement 1,Amendment Agreement 2 and Amendment Agreement 3;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows:
1. Loan Amounts.
| (a) | As of October 31, 2015 (“Amended Reporting Date”), Asculai has loaned Enhance $96,489 under the Loan Agreement (hereinafter the “Asculai Loan Amount”). The Asculai Loan Amount will be increased by any amount loaned by Asculai to Enhance since the Amended Reporting Date or during the term of this Agreement. |
| (b) | As of the Amended Reporting Date, Enhance owes Mercuriali $214,832 under the Loan Agreement (hereinafter “the “Mercuriali Loan Amount”) and $14,940 under the Additional Mercuriali Loan Amount. The Mercuriali Loan Amount will be increased in the event that Mercuriali loans additional monies to Enhance since the Amended Reporting Date or during the term of this Agreement. |
| (c) | Asculai and Mercuriali have agreed jointly or individually to increase the additional loan under Amendment 3 from $45,000 to $90,000 (“The Additional Asculai Loan Amount” and/or “The Additional Mercuriali Loan Amount”) in the event no additional third party monies are received. |
2. Amendment to Conversion Loan Amounts.
Section 3 of the Loan Agreement, as amended by Amendment Agreements 1, 2 and/or 3, is amended by deleting it and replacing it with the following:
3. Conversion of Loan Amounts.
(a) Upon Enhance restructuring at least seventy five percent (75%) of its outstanding debt substantially in accordance with the restructuring plan approved by the Board of Directors of Enhance on February 13, 2013, Asculai shall convert fifty percent (50%) of the Asculai Loan Amount into common shares of Enhance at a conversion price of $0.00376 per share (the “Conversion Price”). Upon Enhance receiving aggregate Transaction Monies (as defined below in Section 3(h)) of at least two hundred and fifty thousand United States dollars (US$250,000) the remainder of the Asculai Loan Amount (the “Remaining Asculai Loan Amount”) shall become unsecured and shall be repaid as set out in Section 4 below.
(b) Upon Enhance restructuring at least seventy five percent (75%) of its outstanding debt substantially in accordance with the restructuring plan approved by the Board of Directors of Enhance on February 13, 2013 and upon Enhance receiving aggregate Transaction Monies (as defined below in Section 3(h)) of at least two hundred and fifty thousand United States dollars (US$250,000), Mercuriali shall convert the Mercuriali Loan Amount into common shares of Enhance at the Conversion Price.
(c) Upon Enhance receiving aggregate Transaction Monies (as defined below in Section 3(h) of at least two hundred and fifty thousand United States dollars (US$250,000) (“Transaction Monies Threshold”), Mercuriali shall convert the Additional Mercuriali Loan Amount into common shares of Enhance at the lower of $0.0047753 or the Average Vis Vires Conversion Price (as defined below in Section 3(e)) (the “Additional Loan Conversion Price”).
(d) Upon Enhance receiving aggregate Transaction Monies (as defined below in Section 3(g)) of at least two hundred and fifty thousand United States dollars (US$250,000), Asculai shall convert the Additional Asculai Loan Amount into common shares of Enhance at the Additional Loan Conversion Price.
(e) The Vis Vires Conversion Price means the weighted average Conversion Price (as defined by The Vis Vires Promissory Note) at which the Vis Vires Promissory Note, or portions thereof, convert prior to the date of conversion of the Additional Mercuriali Loan Amount and the Additional Asculai Loan Amount under this Section 3. In the event that all or part of the Vis Vires Promissory Note is repaid at a premium or discount to its face value, the Conversion Price applicable to that portion shall be such amount taking into account the premium or discount paid, applied to the average price of the 3 lowest days in the 10 trading days preceding the date of repayment on a similar basis to the Vis Vires Promissory Note, as if conversion had taken place. For greater certainty, no conversion of any portion of the Vis Vires Promissory Note after the date of conversion of the Additional Mercuriali Loan Amount and the Additional Asculai Loan Amount under this Section 3 shall be used in calculating the Vis Vires Conversion Price.
(f) In the event of an Tender Offer for or an agreement for Enhance’s sale, merger, or other business combination (“Transaction”) Mercuriali shall have the full right, but not the obligation, to convert the Mercuriali Loan Amount and The Additional Mercuriali Loan Amount into common shares of Enhance at the Conversion Price or Additional Loan Conversion Price, as applicable, and to participate in such Transaction on an equal basis to existing shareholders of Enhance.
(g) In the event of an Tender Offer for or an agreement for Enhance’s sale, merger, or other business combination (“Transaction”) Asculai shall have the full right, but not the obligation, to convert The Additional Asculai Loan Amount into common shares of Enhance at the Additional Loan Conversion Price and to participate in such Transaction on an equal basis to existing shareholders of Enhance.
(h) Transaction Monies shall mean any monies, and the total amount of any other readily realizable cash equivalents or other assets received by Enhance or any of its affiliates from third parties, in respect of any debt financing, equity financing, sale of assets or royalty interest, licensing fees or any other similar funding method including in consequence of any merger or sale of all or part of the Corporation’s business.
3. Conflicts.
Except as set out in this Amendment Agreement, the Loan Agreement, Amendment Agreement 1, Amendment Agreement 2 and Amendment Agreement 3 are unaffected and shall continue in full force and effect in accordance with their terms. If there is any conflict between any provision of this Amendment Agreement and the Loan Agreement, and/or Amendment Agreements 1, 2 and/or 3, the terms of this Amendment Agreement shall prevail.
4. Governing Law.
This Amendment Agreement and all of the rights and obligations arising herefrom shall be interpreted and applied in accordance with the laws of the State of Nevada and the courts of the State of Nevada shall have exclusive jurisdiction to determine all disputes relating to the Agreement and all of the rights and obligations created hereby.
IN WITNESS WHEREOF the parties here have caused this Agreement to be executed and delivered effective as of the date first written above.
| MERCURIALI LTD. | ENHANCE SKIN PRODUCTS INC. | SAMUEL ASCULAI | ||
| Donald Nicholson | Drasko Puseljic | |||
| Chief Executive | General Counsel |