UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-Q
(Mark
One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended: August 31, 2016
OR
[ ]
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ______________ to ______________
Commission
file number: 333-168413
ECOSCIENCES,
INC.
(Exact
Name of Registrant as Specified in Its Charter)
| Nevada |
|
27-2692640 |
| (State
of Other Jurisdiction of |
|
(I.R.S.
Employer |
| Incorporation
or Organization) |
|
Identification
Number) |
| |
|
|
| 420
Jericho Turnpike, Suite 110 |
|
|
| Jericho,
NY 11753 |
|
11753 |
| (Address
of Principal Executive Offices) |
|
(Zip
Code) |
(516)
465-3964
(Registrant’s
Telephone Number, Including Area Code)
With
a copy to:
Philip
Magri, Esq.
Magri
Law, LLC
2642
NE 9th Avenue
Fort
Lauderdale, FL 33334
T:
(646) 502-5900
F:
(646) 826-9200
pmagri@magrilaw.com
www.magrilaw.com
N/A
(Former
Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes
[X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
[ ] No [X]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large
accelerated filer |
[ ] |
Accelerated
filer |
[ ] |
| Non-accelerated
filer |
[ ] |
Smaller
reporting company |
[X] |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
[ ] No [X]
APPLICABLE
ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date. As
of November 3, 2016, there were 147,951,500 shares of Common Stock, $0.0001 par value per share, issued and outstanding.
Table
of Contents
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements (unaudited)
Ecosciences,
Inc.
Condensed
Consolidated Financial Statements
(Unaudited)
Index
Ecosciences,
Inc.
Condensed
Consolidated Balance Sheets
(Unaudited)
| | |
August 31, 2016 | | |
May 31, 2016 | |
| | |
| | |
| |
| ASSETS | |
| | | |
| | |
| | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| | |
| | | |
| | |
| Cash | |
$ | 9,435 | | |
$ | 4,220 | |
| Inventory | |
| 4,374 | | |
| 5,169 | |
| Prepaid expenses | |
| - | | |
| 771 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 13,809 | | |
$ | 10,160 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| | |
| | | |
| | |
| Accounts payable | |
$ | 151,545 | | |
$ | 165,483 | |
| Accrued liabilities | |
| 413,284 | | |
| 331,505 | |
| Due to related parties | |
| 49,083 | | |
| 42,046 | |
| Notes payable | |
| 230,432 | | |
| 261,157 | |
| Convertible notes payable, net | |
| 64,868 | | |
| 30,177 | |
| Derivative liabilities | |
| 186,889 | | |
| – | |
| | |
| | | |
| | |
| Total Liabilities | |
| 1,096,101 | | |
| 830,368 | |
| | |
| | | |
| | |
| Commitments | |
| | | |
| | |
| | |
| | | |
| | |
| Stockholders’ Deficit | |
| | | |
| | |
| | |
| | | |
| | |
| Preferred Stock 50,000,000 shares authorized, $0.0001 par value; | |
| | | |
| | |
| | |
| | | |
| | |
| Series A Redeemable and Convertible Preferred Stock 1,593,630 shares issued
and outstanding | |
| 160 | | |
| 160 | |
| | |
| | | |
| | |
| Series B Preferred Stock 200,000 shares issued and outstanding | |
| 20 | | |
| 20 | |
| | |
| | | |
| | |
| Series C Redeemable and Convertible Preferred Stock 4,700,000 shares issued
and outstanding | |
| 470 | | |
| 470 | |
| | |
| | | |
| | |
| Series D Convertible Preferred Stock 610,000 shares issued and outstanding | |
| 61 | | |
| 61 | |
| | |
| | | |
| | |
| Common Stock 500,000,000 shares authorized, $0.0001 par value; 101,751,500 shares issued and
outstanding | |
| 10,175 | | |
| 10,175 | |
| | |
| | | |
| | |
| Additional Paid-in Capital | |
| 108,956 | | |
| 108,956 | |
| | |
| | | |
| | |
| Deficit | |
| (1,202,134 | ) | |
| (940,050 | ) |
| | |
| | | |
| | |
| Total Stockholders’ Deficit | |
| (1,082,292 | ) | |
| (820,208 | ) |
| | |
| | | |
| | |
| Total Liabilities and Stockholders’ Deficit | |
$ | 13,809 | | |
$ | 10,160 | |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Ecosciences,
Inc.
Condensed
Consolidated Statements of Operations
(Unaudited)
| | |
Three Months Ended | | |
Three Months Ended | |
| | |
August 31, 2016 | | |
August 31, 2015 | |
| | |
| | |
| |
| Revenue | |
$ | 3,472 | | |
$ | 3,354 | |
| Cost of sales | |
| (1,774 | ) | |
| (2,421 | ) |
| | |
| | | |
| | |
| Gross Profit | |
| 1,698 | | |
| 933 | |
| | |
| | | |
| | |
| Expenses | |
| | | |
| | |
| General and administrative | |
| 15,462 | | |
| 69,390 | |
| Professional fees | |
| 125,636 | | |
| 97,500 | |
| | |
| | | |
| | |
| Total Expenses | |
| 141,098 | | |
| 166,890 | |
| | |
| | | |
| | |
| Net Loss Before Other Expenses | |
| (139,400 | ) | |
| (165,957 | ) |
| | |
| | | |
| | |
| Other Expenses | |
| | | |
| | |
| Interest expense | |
| (37,795 | ) | |
| (5,128 | ) |
| Loss on derivative liabilities | |
| (84,889 | ) | |
| – | |
| | |
| | | |
| | |
| Net Loss | |
$ | (262,084 | ) | |
$ | (171,085 | ) |
| | |
| | | |
| | |
| Net Loss Per Share – Basic and Diluted | |
$ | – | | |
$ | – | |
| Weighted-average Common Shares Outstanding – Basic and Diluted | |
| 101,751,500 | | |
| 101,751,500 | |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Ecosciences,
Inc.
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
| | |
Three Months
Ended
August 31, 2016 | | |
Three Months
Ended
August 31, 2015 | |
| | |
| | |
| |
| Cash Flows from Operating Activities | |
| | | |
| | |
| | |
| | | |
| | |
| Net loss | |
$ | (262,084 | ) | |
$ | (171,085 | ) |
| | |
| | | |
| | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Interest expense | |
| 24,691 | | |
| – | |
| Loss on derivative liabilities | |
| 84,889 | | |
| – | |
| Stock-based compensation | |
| – | | |
| 61,000 | |
| | |
| | | |
| | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| – | | |
| 933 | |
| Inventory | |
| 795 | | |
| 88 | |
| Prepaid expenses | |
| 771 | | |
| 487 | |
| Accounts payable | |
| (13,938 | ) | |
| 30,994 | |
| Accrued liabilities | |
| 81,779 | | |
| 61,859 | |
| | |
| | | |
| | |
| Net Cash Used in Operating Activities | |
| (83,097 | ) | |
| (15,724 | ) |
| | |
| | | |
| | |
| Cash Flows from Financing Activities | |
| | | |
| | |
| | |
| | | |
| | |
| Advances from related party, net | |
| 7,037 | | |
| 8,800 | |
| Proceeds from notes payable | |
| 7,500 | | |
| 7,196 | |
| Payment of notes payable | |
| (38,225 | ) | |
| – | |
| Proceeds from convertible notes payable | |
| 112,000 | | |
| – | |
| | |
| | | |
| | |
| Net Cash Provided by Financing Activities | |
| 88,312 | | |
| 15,996 | |
| | |
| | | |
| | |
| Change in Cash | |
| 5,215 | | |
| 272 | |
| | |
| | | |
| | |
| Cash - Beginning of Period | |
| 4,220 | | |
| 381 | |
| | |
| | | |
| | |
| Cash - End of Period | |
$ | 9,435 | | |
$ | 653 | |
| | |
| | | |
| | |
| Supplemental Disclosures of Cash Flow Information: | |
| | | |
| | |
| | |
| | | |
| | |
| Interest paid | |
$ | 175 | | |
$ | – | |
| Income taxes paid | |
$ | – | | |
$ | – | |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Ecosciences,
Inc.
Notes
to the Unaudited Condensed Consolidated Financial Statements
Ecosciences,
Inc. (the “Company”) was incorporated in the State of Nevada on May 26, 2010. The Company’s principal business
is focused on the development, production and sale of environmentally focused wastewater products. It currently produces organic
tablets and powders to be used regularly and in lieu of harmful chemical cleaning products in grease trap and septic tank systems.
The Company intends to generate revenue through the sale of tablets and powders to domestic and international customers in the
food and sanitation industries as well as residential consumers.
The
accompanying unaudited condensed consolidated financial statements of the Company should be read in conjunction with the consolidated
financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual
Report on Form 10-K for the fiscal year ended May 31, 2016. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s
financial position and the results of its operations and its cash flows for the periods shown.
The
preparation of unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could
differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative
of the results to be expected for the full year.
These unaudited
condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue
to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant
revenue since inception and has not generated significant earnings. The continuation of the Company as a going concern is dependent
upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to
continue operations, and the attainment of profitable operations. As of August 31, 2016, the Company has accumulated losses of
$1,202,134 and a working capital deficit of $1,082,292. These factors raise substantial doubt regarding the Company’s ability
to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to
the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.
Inventory
consists of the following:
| | |
August 31, 2016 | | |
May 31, 2016 | |
| Raw Materials | |
$ | 1,171 | | |
$ | 1,353 | |
| Finished Goods | |
| 1,600 | | |
| 2,213 | |
| Packaging Supplies | |
| 1,603 | | |
| 1,603 | |
| | |
| | | |
| | |
| Total | |
$ | 4,374 | | |
$ | 5,169 | |
| 4. |
Related
Party Transactions |
| |
a) |
During
the three months ended August 31, 2016, the Company incurred management services fees of $7,800 (2015 - $17,800) to the President
of the Company. |
| |
|
|
| |
b) |
At
August 31, 2016, and May 31, 2016, the Company was indebted to the President of the Company and a company controlled by the
President of the Company for $49,083 and $42,046, respectively. The amount is unsecured, non-interest bearing and due on demand.
|
Ecosciences,
Inc.
Notes
to the Unaudited Condensed Consolidated Financial Statements
Notes
payable consist of the following:
| |
| |
August 31, 2016 | | |
May 31, 2016 | |
| |
| |
| | |
| |
| a) |
Notes payable that are unsecured, non-guaranteed, non-interest bearing and due on
demand. | |
$ | 5,528 | | |
$ | 5,528 | |
| b) |
Note payable which is unsecured, non-guaranteed, and non-interest bearing. The note is due one
year following the borrowing date. | |
| 8,000 | | |
| 8,000 | |
| c) |
Note payable which is unsecured, non-guaranteed, and bears interest at 10% per annum. The note
is due 60 days following demand. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of $6,778 and $6,274,
respectively. | |
| 20,000 | | |
| 20,000 | |
| d) |
Note payable which is unsecured, non-guaranteed, and bears interest at 8% per annum. The note
is due one year following the borrowing date. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of $31,424
and $27,848, respectively. | |
| 140,000 | * | |
| 170,000 | * |
| e) |
Note payable which is unsecured, non-guaranteed, and bears interest at 8% per annum. The note
is due one year following the borrowing date. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of $420
and $364, respectively. | |
| 2,500 | | |
| 2,500 | |
| f) |
Note payable which is unsecured, non-guaranteed, and bears interest at 8% per annum. The note
is due one year following the borrowing date. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of $1,788
and $1,465, respectively. | |
| 15,000 | | |
| 15,000 | |
| g) |
Note payable which is unsecured, non-guaranteed, and bears interest at 8% per annum. The note
is due six months following the borrowing date. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of
$1 and $5, respectively | |
| 3,904 | | |
| 1,229 | |
| h) |
Note payable which is unsecured, non-guaranteed, and bears interest at 8% per annum. The note
is due one year following the borrowing date. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of $1,398
and $987, respectively. | |
| 20,000 | | |
| 20,000 | |
| i) |
Note payable which is unsecured, non-guaranteed, and bears interest at 8% per annum. The note
is due six months following the borrowing date. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of
$773 and $527, respectively. | |
| 12,000 | | |
| 12,000 | |
| j) |
Note payable which is unsecured, non-guaranteed, and bears interest at 10% per annum. The note
is due six months following the borrowing date. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of
$235 and $176, respectively. | |
| 1,300 | | |
| 4,700 | |
| k) |
Note payable which is unsecured, non-guaranteed, and bears interest at 10% per annum. The note
is due six months following the borrowing date. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of
$58 and $33, respectively. | |
| 1,000 | | |
| 1,000 | |
| l) |
Note payable which is unsecured, non-guaranteed, and bears interest at
10% per annum. The note is due six months following the borrowing date. At August 31, 2016, and May 31, 2016, the Company
owed accrued interest of $66 and $36, respectively. | |
| 1,200 | | |
| 1,200 | |
| |
| |
$ | 230,432 | | |
$ | 261,157 | |
Ecosciences,
Inc.
Notes
to the Unaudited Condensed Consolidated Financial Statements
| 5. |
Notes
Payable (continued) |
| |
* | On
May 9, 2014, the Company entered into a Master Loan Agreement (the “Loan Agreement”),
whereby the lender agreed, from time to time, to purchase from the Company one or more
Promissory Notes for the account of the Company, provided, however, that the aggregate
principal amount of all Promissory Notes then outstanding shall not exceed $500,000 and
that no Event of Default has occurred and remains uncured. Amounts borrowed under the
Loan Agreement are evidenced by an unsecured, non-recourse Promissory Note, bearing interest
at a rate of 8% per annum, maturing on the first anniversary date thereof, and may be
prepaid by the Company before the maturity date. Amounts borrowed under the Loan Agreement
and repaid or prepaid may not be re-borrowed. The Loan Agreement will automatically terminate
and be of no further force and effect upon the earlier to occur of (i) the satisfaction
of all indebtedness, including the promissory notes and any additional indebtedness issued
thereafter, between the Company and the lender and (ii) written termination notice is
delivered by the Company or the lender to the other party. Two notes matured in May 2015
and were not repaid. Therefore, under the default terms of the Loan Agreement, all remaining
promissory notes immediately become due and payable. |
| 6. |
Convertible
Notes Payable |
| |
a) |
On
December 22, 2011, the Company entered into two Convertible Promissory Note agreements for an aggregate of $4,000. The Notes
bear interest at 10% per annum, and the principal amount and any interest thereon are due 60 days following demand. Pursuant
to the agreements, the Notes are convertible into shares of common stock at a conversion price equal to $0.01 per share. At
August 31, 2016, and May 31, 2016, the Company owed accrued interest of $1,878 and $1,778, respectively. At August 31, 2016,
and May 31, 2016, the balance owing on the two Notes was $4,000. |
| |
|
|
| |
b) |
On
December 22, 2011, the Company entered into a Convertible Promissory Note agreement for $10,000. The Note bears interest at
10% per annum, and the principal amount and any interest thereon are due 60 days following demand. Pursuant to the agreement,
the Note is convertible into shares of common stock at a conversion price equal to $0.01 per share. In addition, as a condition
precedent to the right to convert the debt to common stock of the Company, the holder must purchase 3,000,000 shares of common
stock at $0.01 per share. At August 31, 2016, and May 31, 2016, the Company owed accrued interest of $396 and $367, respectively.
At August 31, 2016, and May 31, 2016, the balance owing on the Note was $1,177. |
| |
|
|
| |
c) |
On
December 28, 2011, the Company entered into a Convertible Promissory Note agreement for $1,000. The Note bears interest at
10% per annum, and the principal amount and any interest thereon are due 60 days following demand. Pursuant to the agreement,
the Note is convertible into shares of common stock at a conversion price equal to $0.001 per share. At August 31, 2016, and
May 31, 2016, the Company owed accrued interest of $468 and $443, respectively. At August 31, 2016, and May 31, 2016, the
balance owing on the Note was $1,000. |
| |
|
|
| |
d) |
On
February 19, 2016, the Company entered into a Convertible Promissory Note agreement for $14,000. The Note bears interest at
8% per annum, and the principal amount and any interest thereon are due one year following the borrowing date. Pursuant to
the agreement, the Note is convertible into shares of common stock at a conversion price to be mutually finalized between
the Company and the holder of the Convertible Promissory Note within 48 hours of the conversion request. At August 31, 2016,
and May 31, 2016, the Company owed accrued interest of $585 and $304, respectively. At August 31, 2016, and May 31, 2016,
the balance owing on the Note was $14,000. |
| |
|
|
| |
e) |
On
May 12, 2016, the Company entered into a Convertible Promissory Note agreement for $10,000. The Note bears interest at 8%
per annum, and the principal amount and any interest thereon are due one year following the borrowing date. Pursuant to the
agreement, the Note is convertible into shares of common stock at a conversion price to be mutually finalized between the
Company and the holder of the Convertible Promissory Note within 48 hours of the conversion request. At August 31, 2016, and
May 31, 2016, the Company owed accrued interest of $237 and $40, respectively. At August 31, 2016, and May 31, 2016, the balance
owing on the Note was $10,000. |
| |
|
|
| |
f) |
On
August 25, 2016, the Company entered into a Convertible Promissory Note agreement for $10,000. The Note bears interest at
8% per annum, and the principal amount and any interest thereon are due one year following the borrowing date. Pursuant to
the agreement, the Note is convertible into shares of common stock at a conversion price to be mutually finalized between
the Company and the holder of the Convertible Promissory Note within 48 hours of the conversion request. At August 31, 2016,
the Company owed accrued interest of $13. At August 31, 2016, the balance owing on the Note was $10,000. |
Ecosciences,
Inc.
Notes
to the Unaudited Condensed Consolidated Financial Statements
| 6. |
Convertible
Notes Payable (continued) |
| |
g) |
On
July 19, 2016, the Company entered a Securities Purchase Agreement whereas the Company agreed to issue two Convertible Redeemable
Notes for an aggregate of $121,000. The Convertible Redeemable Notes bear interest at 12% per annum and contain a 10% original
issue discount, such that the purchase price of each $60,500 note is $55,000. The principal amount and any interest thereon
are due one year following the borrowing date. During the first six months that the first Convertible Redeemable Note is in
effect, the Company may redeem the Note at 140% of the par value plus accrued interest. The first of the two Convertible Redeemable
Notes was paid to the Company on July 19, 2016. The second Convertible Redeemable Note (“Back-End Note”) shall
initially be paid for by an offsetting $55,000 promissory note issued to the Company by the lender, provided that prior to
the conversion of the Back-End Note, the lender must have paid off the promissory note in cash. Payment to the Company under
the promissory note must be no later than April 19, 2017. As of October 27, 2016 the second Convertible Redeemable Note has
not funded. The promissory note will initially be secured by the pledge of the Back-End Note. Pursuant to the agreements,
the Convertible Redeemable Notes are convertible into shares of common stock at any time at a conversion price equal to 50%
of the average of the three lowest trading prices of the common stock for the twenty prior trading days including the day
upon which a notice of conversion is received by the Company. In connection with the first Convertible Redeemable Note, the
Company incurred financing costs of $3,000 and an original issue discount of $5,500, which have been recorded as a discount.
|
| |
|
|
| |
|
The
embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging.
The initial fair value of the conversion feature of $90,990 resulted in an additional discount to the note payable of $52,000
and the remaining $38,990 was recognized as a loss on changes in fair value of derivative liability. During the three months
ended August 31, 2016, the Company recorded accretion of $11,479 increasing the carrying value of the note to $11,479. At
August 31, 2016, the Company owed accrued interest of $855. |
| |
|
|
| |
h) |
On
July 19, 2016, the Company entered into a Convertible Promissory Note agreement for $56,750. The principal amount and any
interest thereon are due nine months following the borrowing date. The Note bears interest at 12% per annum, increasing to
24% per annum if any principal or interest in not paid when due. For the first 180 days, the Company has the right to prepay
the Note of up to 150% of all amounts owed. Pursuant to the agreement, the Note is convertible into shares of common stock
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 issue date and (ii) a 50% discount to the lowest trading price of the common stock during the
25 trading day period prior to conversion. The Company incurred financing costs of $6,750 which has been recorded as a discount. |
| |
|
|
| |
|
The
embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging.
The initial fair value of the conversion feature of $79,631 resulted in an additional discount to the note payable of $50,000
and the remaining $29,631 was recognized as a loss on changes in fair value of derivative liability. During the three months
ended August 31, 2016, the Company recorded accretion of $13,212 increasing the carrying value of the note to $13,212. At
August 31, 2016, the Company owed accrued interest of $802. |
| 7. |
Derivative
Liabilities |
The
embedded conversion options of the Company’s convertible debentures described in Note 6 contain conversion features that
qualify for embedded derivative classification. The fair value of these liabilities will be re-measured at the end of every reporting
period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial
instruments.
The
table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities:
| | |
Three Months Ended August 31, 2016 | |
| Balance at the beginning of the period | |
$ | – | |
| | |
| | |
| Addition of new derivative liabilities | |
| 170,621 | |
| Change in fair value of embedded conversion option | |
| 16,268 | |
| | |
| | |
| Balance at the end of the period | |
$ | 186,889 | |
Ecosciences,
Inc.
Notes
to the Unaudited Condensed Consolidated Financial Statements
| 7. |
Derivative
Liabilities (continued) |
The
Company uses Level 3 inputs for its valuation methodology for the warrant derivative liabilities and embedded conversion option
liabilities as their fair values were determined by using the Black-Scholes option pricing model based on various assumptions.
The model incorporates the price of a share of the Company’s common stock (as quoted on the Over the Counter Bulletin Board),
volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result
in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that
is significant to the fair value measurement. The following table shows the assumptions used in the calculations:
| | |
Expected
Volatility | |
Risk-free
Interest Rate | | |
Expected
Dividend Yield | | |
Expected Life
(in years) |
| At issuance | |
222% - 232 | % |
| 0.56 | % | |
| 0 | % | |
0.75-1.00 |
| At August 31, 2016 | |
227% - 241 | % |
| 0.61 | % | |
| 0 | % | |
0.63-0.88 |
| |
a) |
On
June 4, 2015, the Company filed a Certificate of Amendment (the “Amendment”) to its Certificate of Designation
for the Company’s Series C convertible preferred stock originally filed with the Secretary of State of Nevada on April
20, 2015. Pursuant to the Amendment, the Company increased the number of shares of common stock issuable upon the conversion
of each share of Series C preferred stock from 10 shares to 12 shares but also added the restriction that the holder has to
wait until the one year anniversary date of issuance before the holder can elect to convert. Also, the Company removed the
right of the holder to elect to have any portion of the shares be repurchased by the Company at $0.10 per share, and amended
the voting rights to increase the voting equivalency of each share of Series C preferred stock from 10 shares to 12 shares
of common stock. |
| |
|
|
| |
b) |
On
June 4, 2015, the Company designated 10,000,000 shares of preferred stock as Series D convertible preferred stock. The holders
of the Series D convertible preferred stock may elect to convert their shares at any time and from time to time and after
the first year anniversary of the issue date. Each share of Series D convertible preferred stock is convertible into 10 shares
of common stock of the Company; provided, however, that the holder is prohibited from converting such number of shares of
Series D convertible preferred stock that would result in the stockholder beneficially owning more than 4.99% of the common
stock of the Company. The holders of the Series D convertible preferred stock shall be entitled to a number of votes equal
to the number of shares of common stock into which the Series D shares held are convertible. |
| |
|
|
| |
c) |
On
June 4, 2015, upon execution of the Management Services Agreement referred to in Note 9 (a), the Company issued 100,000 shares
of the Series D convertible preferred stock to the President of the Company at $0.10 per share in exchange for management
services. |
| |
|
|
| |
d) |
On
June 4, 2015, upon execution of the Services Agreements referred to in Note 9 (b), the Company issued 400,000 shares of the
Series D convertible preferred stock to persons or companies at $0.10 per share in exchange for services. |
| |
|
|
| |
e) |
On
June 11, 2015, upon execution of the Services Agreements referred to in Notes 9 (d) and (e), the Company issued 110,000 shares
of the Series D convertible preferred stock to persons or companies at $0.10 per share in exchange for services. |
| |
|
|
| |
f) |
On
September 11, 2015, the Company filed a Certificate of Amendment (the “Amendment”) to amend the provisions of
the Company’s Amended and Restated Certificate of Designation for the Company’s Series A convertible preferred
stock originally filed with the Secretary of State of Nevada on May 8, 2014. Pursuant to the Amendment, the Company restated
the conversion and redemption terms of the Series A convertible preferred stock. For shares of Series A convertible preferred
stock issued prior to September 11, 2015, the holders shall have the right to convert the shares from the first anniversary
date of issuance. For shares of Series A convertible preferred stock issued on or after September 11, 2015, the holders shall
have the right to convert the shares from October 1, 2016. The Company may also redeem all, or any portion of, the outstanding
shares of Series A convertible preferred stock for $0.40 per share. |
| |
|
|
| |
g) |
On
September 11, 2015, the Company entered into a Stock Purchase Agreement, whereby the Company issued 125,000 shares of Series
A preferred stock at $0.20 per share for proceeds of $25,000. |
Ecosciences,
Inc.
Notes
to the Unaudited Condensed Consolidated Financial Statements
| |
a) |
On
June 4, 2015, the Company entered into a Management Services Agreement with the President, CEO, Secretary and Treasurer of
the Company. In consideration for his services, the Company has agreed to pay $31,200 per year, accruing in equal monthly
increments of $2,600, and to issue an aggregate of 1,000,000 shares of the Company’s Series D convertible preferred
stock, of which 100,000 shares were issued upon the execution of the Management Services Agreement, and the remaining 900,000
shares of which shall vest in increments upon the achievement by the Company of the milestones set forth in the Management
Services Agreement, including the completion of product line expansion, and signing distributors nationally and internationally.
The term of the Management Services Agreement is for one year, commencing on the date of the agreement, and is automatically
renewable for successive one year terms unless mutually agreed to in writing. |
| |
|
|
| |
b) |
On
June 4, 2015, the Company entered into Services Agreements with four unrelated third party persons or companies. In consideration
of these services, the Company has agreed to pay an aggregate $96,000 per year, accruing in equal monthly increments of $8,000,
and to issue an aggregate 4,000,000 shares of the Company’s Series D convertible preferred stock, of which 400,000 shares
were issued upon the execution of the Services Agreements, and the remaining 3,600,000 shares of which shall vest in increments
upon the achievement by the Company of the milestones set forth in the Services Agreements, including the completion of product
line expansion, and signing distributors nationally and internationally. The terms of the Services Agreements are for one
year, commencing on the date of the agreements, and are automatically renewable for successive one year terms unless mutually
agreed to in writing. |
| |
|
|
| |
c) |
On
June 9, 2015, the Company entered into a Consultancy Agreement with a company for investor relations services. The Company
has agreed to pay $5,000 per month and the term of the Consultancy Agreement is for six months, commencing June 11, 2015.
On January 1, 2016, the Consultancy Agreement was extended for an additional six months. The Consultancy Agreement was not
renewed and expired during the period. |
| |
|
|
| |
d) |
On
June 11, 2015, the Company entered into a Services Agreement with an unrelated third party company. In consideration of these
services, the Company has agreed to pay $60,000 per year, accruing in equal monthly increments of $5,000, and to issue 500,000
shares of the Company’s Series D convertible preferred stock, of which 50,000 shares were issued upon the execution
of the Services Agreement, and the remaining 450,000 shares of which shall vest in increments upon the achievement by the
Company of the milestones set forth in the Services Agreement, including the completion of product line expansion, and signing
distributors nationally and internationally. The terms of the Services Agreement is for one year, commencing on the date of
the agreement, and is automatically renewable for successive one year terms unless mutually agreed to in writing. |
| |
|
|
| |
e) |
On
June 11, 2015, the Company entered into Services Agreements with two unrelated third party persons or companies. In consideration
of these services, the Company has agreed to issue an aggregate 600,000 shares of the Company’s Series D convertible
preferred stock, of which 60,000 shares were issued upon the execution of the Services Agreements, and the remaining 540,000
shares of which shall vest in increments upon the achievement by the Company of the milestones set forth in the Services Agreements,
including the completion of product line expansion, and signing distributors nationally and internationally. The terms of
the Services Agreements are for one year, commencing on the date of the agreements, and are automatically renewable for successive
one year terms unless mutually agreed to in writing. |
Ecosciences,
Inc.
Notes
to the Unaudited Condensed Consolidated Financial Statements
The
Company’s revenues were concentrated among three customers for the three months ended August 31, 2016, and four customers
for the three months ended August 31, 2015:
| Customer | |
Revenue for the Three Months Ended
August
31, 2016 | | |
Revenue for the Three Months Ended
August
31, 2015 | |
| 1 | |
| 45 | % | |
| 37 | % |
| 2 | |
| 31 | % | |
| 23 | % |
| 3 | |
| 11 | % | |
| 16 | % |
| 4 | |
| * | | |
| 11 | % |
The
Company’s receivables were concentrated among three customers as at August 31, 2016, and four customers as at May 31, 2016:
| Customer | |
Receivables as at
August 31, 2016 | | |
Receivables as at
May 31, 2016 | |
| 1 | |
| 45 | % | |
| 37 | % |
| 2 | |
| 19 | % | |
| 35 | % |
| 3 | |
| 17 | % | |
| 35 | % |
| 4 | |
| * | | |
| 16 | % |
*
not greater than 10%
| |
● |
On
October 31, 2016, the Company issued an aggregate of 5 million (5,000,000) shares of common stock to an unaffiliated lender
pursuant to a Notice of Conversion whereby the lender elected to convert an aggregate of $5,000 of indebtedness of the Company
into such shares at a price of $0.001 per share under a Debt Conversion Agreement dated October 18, 2016 between the Company
and the lender. |
| |
|
|
| |
● |
On
October 31, 2016, the Company issued an aggregate of 5 million (5,000,000) shares of common stock to an unaffiliated lender
pursuant to a Notice of Conversion whereby the lender elected to convert an aggregate of $5,000 of indebtedness of the Company
into such shares at a price of $0.001 per share under a Debt Conversion Agreement dated October 19, 2016 between the Company
and the lender. |
| |
|
|
| |
● |
On
October 31, 2016, the Company issued an aggregate of 5 million (5,000,000) shares of common stock to an unaffiliated lender
pursuant to a Notice of Conversion whereby the lender elected to convert an aggregate of $5,000 of indebtedness of the Company
into such shares at a price of $0.001 per share under a Debt Conversion Agreement dated October 21, 2016 between the Company
and the lender. |
| |
|
|
| |
● |
On
November 1, 2016, the Company sold a Promissory Note to an unaffiliated lender for the aggregate principal amount of $12,500,
bearing interest at a rate of 8% per annum and maturing the first year anniversary of the date of issuance. The Company may
prepay the principal and accrued interest at any time without penalty. |
| |
|
|
| |
● |
On
November 1, 2016, the Company entered into a lease agreement with a corporation controlled by the Company’s Chief Executive
Officer. Pursuant to the lease agreement, the Company has agreed to lease the Company’s office space located at 420
Jericho Turnpike, Suite 110, Jericho, NY 11753 on a month-to-month basis for $750.00 per month. Either party may terminate
the lease agreement by providing 30 days’ prior notice to the other. |
| |
|
|
| |
● |
On
November 1, 2016, the Board of Directors of the Company appointed Dan Cohen as the Chief Operating Officer of the Company,
effective immediately. |
Since
2009, Mr. Cohen (57 years old), has been serving as Partner, Vice President and Director of Sales & Marketing for Newco Marketing,
Inc., marketing consultants, and manufacturer/distributor of an innovative home shower spa system, as well as service provider
of a remote computer support service. From 1988 to 2009, Mr. Cohen was a Partner and held the positions of Vice President and
Director of Marketing for Back To Nature Products Co., manufacturers of safer paint removers, lead abatement products and green
cleaners. Mr. Cohen has over 28 years of experience running the day-to-day operations of a company, including hiring personnel
and negotiating contracts. Mr. Cohen has proven success in the areas of marketing, sales, digital, direct response infomercials,
advertising, new product launches, and establishing both retail and commercial distribution. He is also a published author in
various trade publications and award winner of the QVC Hobby and Craft Recognition Awards.
On
November 1, 2016, the Company entered into a Management Services Agreement with Dan Cohen. In consideration for Mr. Cohen serving
as the Company’s Chief Operating Officer, the Company has agreed to pay Mr. Cohen $84,000 a year, accruing in equal monthly
increments of $7,000, plus 3% commission on gross sales, and to issue to Mr. Cohen an aggregate of one million (1,000,000) shares
of the Company’s Series D Preferred Stock, of which 100,000 shares were issued upon the execution the Management Services
Agreement and a Purchase Agreement (as defined below), with the remaining 900,000 incrementally vesting upon the achievement by
the Company of the milestones set forth below:
| 1. |
Execution
of this Agreement |
100,000
|
| 2. |
Complete
product line expansion with the development and introduction of “green line” products that complement our existing
line for use in commercial kitchens, the food service industry and other industries and produce Green Seal approved Eco-Logical
market ready inventory |
45,000
|
| 3. |
Sign
Northeast, USA Master Distributor |
75,000
|
| 4. |
Sign
Midwest, USA Master Distributor |
75,000
|
| 5. |
Sign
West Coast, USA Master Distributor |
75,000
|
| 6. |
Sign
Southern, USA Master Distributor |
75,000 |
| 7. |
Sign
Retail Distributor - Design and produce a retail package for in-store shelf and clip strip displays and place product in minimum
of five (5) retail outlets |
60,000
|
| 8. |
Sign
Regional Distributor for expansion into South America |
75,000
|
| 9. |
Sign
Regional Distributor for expansion into Europe |
75,000
|
| 10. |
Sign
Regional Distributor for expansion into the Middle East |
75,000
|
| 11. |
Sign
Regional Distributor for expansion into India |
75,000
|
| 12. |
Sign
Regional Distributor for expansion into Asia |
75,000
|
| 13. |
Redesign
the product for expansion into the municipal wastewater service industry and sign minimum of two (2) contracts with municipalities
within the industry |
60,000
|
| 14. |
Sign
contract with Infomercial production company for consumer products and launch the infomercial campaign with the first TV infomercial
broadcast |
60,000
|
| TOTAL: |
1,000,000 |
The
term of Mr. Cohen’s Management Services Agreement with the Company is for six months, commencing on the date of the agreement,
and automatically renews for successive one year terms unless terminated pursuant to the terms thereto.
| |
● |
On
November 1, 2016, the Company entered into a Restricted Stock Purchase Agreement (“Purchase Agreement”) with Dan
Cohen in connection with Mr. Cohen’s Management Services Agreement. Pursuant to the Purchase Agreement, the Company
issued 100,000 shares of Series D Preferred Stock to Mr. Cohen for a purchase price of $0.001 per share, which is equal to
the Stated Value of the shares, in consideration for services rendered to the Company by Mr. Cohen. |
| |
|
|
| |
● |
On
November 2, 2016, the Company entered into an Amended and Restated Management Services Agreement with Joel Falitz. In consideration
for Mr. Falitz serving as the Company’s Chief Executive Officer, President, Secretary and Treasurer, the Company has
agreed to pay Mr. Falitz a $31,200 signing bonus and a salary of $84,000 per year, accruing at $7,000 per month. In satisfaction
of the $31,200 signing bonus, the Company issued Mr. Falitz an aggregate of 31.2 million (31,200,000) shares of Common Stock
for $0.001 per share. Pursuant to the Amended and Restated Management Services Agreement, the Company also agreed to issue
to Mr. Falitz an aggregate of 900,000 shares of the Company’s Series D Preferred Stock, all of which vest in increments
upon the achievement by the Company of the milestones set forth below: |
| 1. |
Complete
product line expansion with the development and introduction of “green line” products that complement our existing
line for use in commercial kitchens, the food service industry and other industries and produce Green Seal approved Eco-Logical
market ready inventory |
45,000
|
| 2. |
Sign
Northeast, USA Master Distributor |
75,000
|
| 3. |
Sign
Midwest, USA Master Distributor |
75,000
|
| 4. |
Sign
West Coast, USA Master Distributor |
75,000
|
| 5. |
Sign
Southern, USA Master Distributor |
75,000 |
| 6. |
Sign
Retail Distributor - Design and produce a retail package for in-store shelf and clip strip displays and place product in minimum
of five (5) retail outlets |
60,000
|
| 7. |
Sign
Regional Distributor for expansion into South America |
75,000
|
| 8. |
Sign
Regional Distributor for expansion into Europe |
75,000
|
| 9. |
Sign
Regional Distributor for expansion into the Middle East |
75,000
|
| 10. |
Sign
Regional Distributor for expansion into India |
75,000
|
| 11. |
Sign
Regional Distributor for expansion into Asia |
75,000
|
| 12. |
Redesign
the product for expansion into the municipal wastewater service industry and sign minimum of two (2) contracts with municipalities
within the industry |
60,000
|
| 13. |
Sign
contract with Infomercial production company for consumer products and launch the infomercial campaign with the first TV infomercial
broadcast |
60,000
|
| TOTAL: |
900,000 |
The
term of Mr. Falitz’s Amended and Restated Management Agreement with the Company is for one year, commencing on the date
of the agreement, and automatically renews for successive one year terms unless terminated pursuant thereto.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You
should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes
included elsewhere in this report. This discussion contains forward-looking statements, which involve risks and uncertainties.
Our actual results may differ materially from those we currently anticipate as a result of many factors, including the factors
we describe in this report and our other reports filed with the Securities and Exchange Commission.
Forward
Looking Statements
Some
of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can
identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,”
“believe,” “estimate” and “continue,” or similar words. You should read statements that contain
these words carefully because they:
| |
● |
discuss
our future expectations; |
| |
|
|
| |
● |
contain
projections of our future results of operations or of our financial condition; and |
| |
|
|
| |
● |
state
other “forward-looking” information. |
We
believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately
predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those
anticipated in these forward-looking statements as a result of certain factors, including those set forth elsewhere in this Report.
Unless
stated otherwise, the words “we,” “us,” “our,” the “Company” or “Ecosciences”
in this section collectively refer to Ecosciences, Inc. and its wholly-owned subsidiary, Eco-Logical Concepts, Inc., a Delaware
corporation.
Corporate
History
We
were formerly known as On-Air Impact, Inc., a Nevada corporation (“On-Air Impact”). From the date of our inception
on May 26, 2010 until the consummation of the reverse merger described below on May 9, 2014, On-Air Impact had been a “shell
company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)).
On
May 9, 2014, On-Air Impact and its wholly-owned subsidiary, Eco Merger Sub, Inc., a Delaware corporation (“Merger Sub”),
consummated a reverse merger (the “Merger”) with Eco-Logical Concepts, Inc., a Delaware corporation (“Eco-Logical”),
pursuant to the terms and conditions of that certain Agreement and Plan of Merger, dated May 9, 2014 (the “Merger Agreement”),
whereby Merger Sub merged with and into Eco-Logical with Eco-Logical being the surviving corporation and replacing Merger Sub
as On-Air Impact’s wholly-owned subsidiary. Since the Merger, the business and operations of Eco-Logical have been business
and operations of On-Air Impact.
At
the closing of the Merger:
| ● |
Every
one hundred (100) shares of Common Stock, par value $0.0001 per share, of Eco-Logical issued and outstanding immediately prior
to the closing of the Merger was converted into one (1) share of Common Stock, par value $0.0001 per share (the “Common
Stock”), of On-Air Impact, rounding up to the nearest whole number for resulting fractional shares; and |
| |
|
| ● |
Each
share of Series A Non-Convertible Preferred Stock, par value $0.0001 per share, of Eco-Logical issued and outstanding immediately
prior to the closing of the Merger was converted into one share of Series B Non-Convertible Preferred Stock, par value $0.0001
per share (the “Series B Non-Convertible Preferred Stock”), of On-Air Impact. |
In
addition, pursuant to the Merger Agreement, on May 9, 2014, Joel Falitz, the President and Chief Executive Officer of Eco-Logical,
was appointed to serve as the Chairman of our Board of Directors for a one-year period until the next annual stockholders’
meeting or until his successor is elected and qualified and as the Chief Executive Officer, President, Secretary and Treasurer
of the Company.
As
a result of the Merger, On-Air Impact ceased to be a shell company. The information contained in our “Super Form 8-K”
filed on May 15, 2014 constitutes the current “Form 10 information” necessary to satisfy the conditions contained
in Rule 144(i)(2) under the Securities Act of 1933, as amended (the “Securities Act”).
The
Merger was intended to be treated as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended,
and has been treated as a recapitalization of the Company for financial accounting purposes. Even though On-Air Impact was the
legal acquirer, Eco-Logical is considered to be the acquirer for accounting purposes, and the Company’s historical financial
statements before the Merger will be replaced with the historical financial statements of Eco-Logical before the Merger in this
Report and all future filings with the SEC.
To
better reflect our new operations as a result of the Merger, on June 23, 2014, the Company changed its name from “On-Air
Impact” to “Ecosciences, Inc.” On June 23, 2014, we also increased our authorized capital stock from 100 million
shares of Common Stock to 500 million shares; and from 10 million shares of “blank check” Preferred Stock, par value
$0.0001 per share (“Preferred Stock”) to 50 million shares. We also effectuated a 500-for-1 forward stock split of
our outstanding Common Stock on June 23, 2014 (the “Forward Stock Split”).
On
July 21, 2014, the ticker symbol of our Common Stock on the OTCQB was changed from “OAIR” to “ECEZ” to
better reflect our new name.
As
a result of the Merger and the change in our business and operations, a discussion of the past financial results of On-Air Impact,
Inc. is not pertinent, and under generally accepted accounting principles in the United States, the historical financial results
of Eco-Logical, the accounting acquirer, prior to the Merger are considered the historical financial results of the Company.
The
following discussion highlights Ecosciences’ results of operations and the principal factors that have affected our consolidated
financial condition as well as our liquidity and capital resources for the periods described, and provides information that management
believes is relevant for an assessment and understanding of our consolidated financial condition and results of operations presented
herein. The following discussion and analysis is based on Ecosciences’ unaudited condensed consolidated financial statements
contained in this Report, which have been prepared in accordance with generally accepted accounting principles in the United States.
You should read the discussion and analysis together with such financial statements and the related notes thereto.
Overview
Our
wholly-owned operating subsidiary, Eco-Logical Concepts Inc. (hereinafter referred to as the “Company,” “Eco,”
“Eco-Logical,” “our,” we,” “us,” and similar terms), was incorporated in the state of
Delaware on November 30, 2011.
Located
in Jericho, New York, Eco-Logical provides bio-remediation services for sewers, sludge ponds, septic tanks, lagoons, farms, car
washes, portable sanitation facilities, grease tanks, lakes and ponds. We provide a suite of tablet-based products that can be
added to waste systems. The active ingredients in our tablets oxygenate wastewater, remove hydrogen sulfide odors, prevent corrosion
in wastewater systems and initiate aerobic biological breakdown of organic sludge including fats, oils and grease. The tablets
are non-toxic to the environment, non-caustic and comprised of natural ingredients that do not require any special permitting
for use and disposal. The product is simple to use directly by the end consumer.
The
Company’s bioremediation products are sold under the brands Trap-Eze, Sept-Eze, Tank-Eze and Wash-Eze.
The
Company has formulated a business model that management believes can help it grow and achieve economies of scale over time. We
have undertaken the necessary due diligence and prepared a business that will enable us to compete in the market for bio-remediation
services.
The
Company is focused on building, acquiring and investing in businesses around ecological and life sciences. From waste water remediation
to healthcare and more, Ecosciences is committed to building a better living environment for all people.
Product
Development
Growth
Strategy of the Company
Our
mission is to maximize stockholder value through expanding the scope of products offered. We intend to conduct research and development
to bring new, improved products to market to ensure we are competitive in our market space. We intend to focus on growing our
distribution channels using master-distributor relationships, full-line distributors and other similar sales channels. We intend
to build product and brand awareness through a direct retail channel using online marketing and info-commercials, which we believe
will provide a feedback benefit for the growth of our other distribution channels as well as to establish opportunities for indirect
retail sales channels, such as through chain stores and small retailers.
We
have been working to set up regional distributors in several different market segments, such as septic systems, grease traps,
ponds, agricultural and wastewater. Sales this fiscal year have primarily been to Mexico, and we are currently finalizing more
orders locally in New Jersey. All sales were completed in US dollars and have not been subject to any foreign taxes.
During
the fourth quarter ended May 31, 2016, we commenced developing additional eco-based products in order to expand our product line.
During the quarter ended November 30, 2015, we successfully test marketed a liquid version of our Tank-Eze bioremediation product
(“Liquid Tank-Eze”). Liquid Tank-Eze is different than the regular Tank-Eze in that it does not have the oxygen feature
and is designed to be primarily used in the treatment of drain lines prior to, or in conjunction with, Tank-Eze. As part of its
test marketing, we sold the Liquid Tank-Eze product in a four ounce (4 oz.) concentrated size through our online channels. We
intend to increase our marketing of Liquid Tank-Eze with a wider and more official launch in the near future. We also intend to
sell a line of eco-friendly certified green cleaning solutions, including but not limited to, a multi-surface cleaner and a glass
cleaner.
Critical
Accounting Policies, Estimates, and Judgments
Our
unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments,
our commitments to strategic alliance partners and the timing of the achievement of collaboration milestones. We base our estimates
and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially
different results can occur as circumstances change and additional information becomes known. Besides the estimates identified
above that are considered critical, we make many other accounting estimates in preparing our financial statements and related
disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses,
as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience
and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances
change and additional information becomes known, even for estimates and judgments that are not deemed critical.
Results
of Operations
Three
Months Ended August 31, 2016 Compared to the Three Months Ended August 31, 2015
The
following table presents Eco-Logical’s results of operations for the periods indicated and as a percentage of total revenue.
Historical results are not necessarily indicative of results for future periods.
| | |
Three-Month Period Ended | |
| | |
August
31, 2016* | | |
August
31, 2015* | |
| | |
$ | | |
% of Revenue | | |
$ | | |
% of Revenue | |
| | |
| | |
| | |
| | |
| |
| Revenue: | |
$ | 3,472 | | |
| – | | |
$ | 3,354 | | |
| – | |
| Cost of sales: | |
| (1,774 | ) | |
| (51.09 | )% | |
| (2,421 | ) | |
| (72.18 | )% |
| Gross profit | |
| 1,698 | | |
| 48.91 | % | |
| 933 | | |
| 27.82 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| General and administrative | |
| 15,462 | | |
| 445.33 | % | |
| 69,390 | | |
| 2,068.87 | % |
| Professional fees | |
| 125,636 | | |
| 3,618.55 | % | |
| 97,500 | | |
| 2,906.98 | % |
| Total Expenses | |
| 141,098 | | |
| 4,063.88 | % | |
| 166,890 | | |
| 4,975.85 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss before other expenses: | |
| (139,400 | ) | |
| (4,014.98 | )% | |
| (165,957 | ) | |
| (4,948.03 | )% |
| | |
| | | |
| | | |
| | | |
| | |
| Other expenses: | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
| (37,795 | ) | |
| (1,088.57 | )% | |
| (5,128 | ) | |
| (152.89 | )% |
| Loss on derivative liabilities | |
| (84,889 | ) | |
| (2,444.96 | )% | |
| - | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
$ | (262,084 | ) | |
| (7,548.50 | )% | |
$ | (171,085 | ) | |
| (5,100.92 | )% |
*Amounts
may not sum due to rounding.
The
following tables present our revenue and operating expenses for the periods indicated.
Revenue
| | |
Three-Month Period Ended | | |
| |
| | |
August 31, 2016 | | |
August 31, 2015 | | |
% Change | |
| | |
| | | |
| | | |
| | |
| Revenue | |
$ | 3,472 | | |
$ | 3,354 | | |
| 3.52 | % |
Our
Revenue increased 3.52% for the three months ended August 31, 2016 as compared to the three months ended August 31, 2015. The
increase is attributed to more repeat sales from existing customers.
Costs
and Expenses
Costs
of Sales
| | |
Three-Month Period Ended | | |
| |
| | |
August 31, 2016 | | |
August 31, 2015 | | |
% Change | |
| | |
| | | |
| | | |
| | |
| Costs of Sales | |
$ | 1,774 | | |
$ | 2,421 | | |
| (26.72 | )% |
Our
Costs of Sales decreased 26.72% for the three months ended August 31, 2016 as compared to the three months ended August 31, 2015.
The decrease is due to a decrease in sales volume through E-commerce which carries additional shipping and merchant fees.
Operating
Expenses
| | |
Three-Month Period Ended | | |
| |
| | |
August 31, 2016 | | |
August 31, 2015 | | |
% Change | |
| | |
| | | |
| | | |
| | |
| Operating Expenses | |
$ | 141,098 | | |
$ | 166,890 | | |
| (15.45 | )% |
Our Operating Expenses decreased 15.45% for
the three months ended August 31, 2016 as compared to the three months ended August 31, 2015. The decrease is the result of a
decrease in Management Fees as well as several less significant decreases in administrative costs.
Interest
Expense
| | |
Three-Month Period Ended | | |
| |
| | |
August 31, 2016 | | |
August 31, 2015 | | |
% Change | |
| Interest Expense | |
$ | 37,795 | | |
$ | 5,128 | | |
| 637.03 | % |
Our
Interest Expense increased 637.03% for the three months ended August 31, 2016 as compared to the three months ended August 31,
2015. The increase is attributable to the sale of additional promissory notes to finance operations, some of which included debt
discounts which are amortized to interest expense each period.
Financial
Condition, Liquidity and Capital Resources
At
August 31, 2016, we had $9,435 in cash on hand and an accumulated deficit of $1,202,134; and had $3,472 in revenues for the three-month
period ended August 31, 2016. In their report for the fiscal year ended May 31, 2016, our auditors have expressed that there is
substantial doubt as to our ability to continue as a going concern. We have incurred operating losses since our formation and
expect to incur losses and negative operating cash flows for the foreseeable future. We expect to incur substantial losses for
the foreseeable future and may never become profitable. We also expect to continue to incur significant operating and capital
expenditures for the next several years and anticipate that our expenses will increase substantially in the foreseeable future.
We also expect to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures.
As a result, we will need to generate significant revenues in order to achieve and maintain profitability. We may not be able
to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability could negatively
impact the value of our Common Stock.
To
date, we have financed our operations primarily through the sale of Convertible Promissory Notes to Joel Falitz and other non-affiliated
third parties and the issuance and sale of equity securities for cash consideration. During the quarter ended August 31, 2016,
we have financed our operations by the following:
| |
● |
Auctus
Fund, LLC. On July 25, 2016, 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, between the Company and Auctus. |
The
Auctus Note bears interest at the rate of 12% per annum and matures on April 19, 2017. 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 Company has the right to prepay the Auctus Note with a premium of up to 150% of all amounts
owed to Auctus, depending upon when the prepayment is effectuated. The Auctus Note may not be prepaid after the 180th 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 Auctus 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) a 50% discount to the lowest trading price of
the common stock during the 25 trading day period prior to conversion (“Conversion Price”).
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 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.
| |
● |
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. As of October 27, 2016 the second Convertible
Redeemable Note has not funded. 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 April 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.
| |
● |
On
August 25, 2016, the Company entered into a Convertible Promissory Note Agreement for $10,000 with a third party unaffiliated
lender. The Note bears interest at 8% per annum, and the principal amount and any interest thereon are due one year following
the borrowing date. Pursuant to the agreement, the Note is convertible into shares of common stock at a conversion price to
be mutually finalized between the Company and the holder of the Convertible Promissory Note within 48 hours of the conversion
request. |
| |
|
|
| |
● |
On
August 25, 2016, the Company borrowed $1,237 from the President of the Company, $1,000 of which was repaid on August 30, 2016.
The loan is unsecured, non-recourse and non-interest bearing. |
| |
|
|
| |
● |
On November
1, 2016, the Company sold a Promissory Note to an unaffiliated lender for the aggregate
principal amount of $12,500, bearing interest at a rate of 8% per annum and maturing
the first year anniversary of the date of issuance. The Company may prepay the principal
and accrued interest at any time without penalty.
|
Working
Capital
Since the Company’s inception, we have
incurred recurring net losses and negative cash flows from operations. As of August 31, 2016, we had a working capital deficit
of $1,082,292, an accumulated deficit of $1,202,134 and a stockholders’ deficit of $1,082,292.
At
August 31, 2016, the Company was indebted to the President of the Company and a company controlled by the President of the Company
for $49,083. The amount is unsecured, non-interest bearing and due on demand.
We
do not believe our cash resources are sufficient to implement our current business plan, support operations and meet current obligations
for the next 12 months. We plan to raise additional capital to finance our operations. There can be no assurance that financing
will be available when required in sufficient amounts, on acceptable terms or at all. In the event that the necessary additional
financing is not obtained, we may be required to reduce our discretionary overhead costs substantially, including research and
development, general and administrative and sales and marketing expenses or otherwise curtail operations.
Cash
and Cash Equivalents
The
following table summarizes the sources and uses of cash for the periods stated. The Company held no cash equivalents for any of
the periods presented.
| | |
For the Three Months Ended | |
| | |
August 31, 2016 | | |
August 31, 2015 | |
| Cash, beginning of period | |
$ | 4,220 | | |
$ | 381 | |
| Net cash used in operating activities | |
| (83,097 | ) | |
| (7,224 | ) |
| Net cash provided by investing activities | |
| – | | |
| – | |
| Net cash provided by financing activities | |
| 88,312 | | |
| 7,496 | |
| Cash, end of period | |
$ | 9,435 | | |
$ | 653 | |
Off-Balance
Sheet Operations
The
Company does not have any off-balance sheet transactions.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
N/A
Item
4. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures.
In
accordance with Exchange Act Rules 13a-15 and 15d-15, our management is required to perform an evaluation under the supervision
and with the participation of the Company’s management, including the Company’s principal executive officer and principal
financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures
as of the end of the period.
Based
upon that evaluation, our management has concluded that, as of August 31, 2016, our disclosure controls and procedures were not
effective.
Changes
in Internal Control over Financial Reporting
No
change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred
during the fiscal quarter ended August 31, 2016 that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings
None
Item
1A. Risk Factors
N/A
Item
2. Unregistered Sale of Equity Securities and Use of Proceeds
| |
● |
Auctus
Fund, LLC. On July 25, 2016, the Company closed on the issuance of a Convertible Promissory Note, dated July 19, 2016,
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 Note bears interest at 12% per annum, increasing
to 24% per annum if any principal or interest in not paid when due. For the first 180 days, the Company has the right to prepay
the Note of up to 150% of all amounts owed. Pursuant to the agreement, the Note is convertible into shares of common stock
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 issue date and (ii) a 50% discount to the lowest trading price of the common stock during the
25 trading day period prior to conversion. |
| |
● |
ADAR
Bays, LLC. On July 21, 2016, the Company closed a Securities Purchase Agreement 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, with the first note being in the amount of $60,500 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. Pursuant to the agreements, the Convertible Redeemable Notes are convertible into shares of common stock at
any time at a conversion price equal to 50% of the average of the three lowest trading prices of the common stock for the
twenty prior trading days including the day upon which a notice of conversion is received by the Company. |
| |
|
|
| |
● |
On
August 25, 2016, the Company entered into a Convertible Promissory Note Agreement for $10,000 with a third party unaffiliated
lender. The Note bears interest at 8% per annum, and the principal amount and any interest thereon are due one year following
the borrowing date. Pursuant to the agreement, the Note is convertible into shares of common stock at a conversion price to
be mutually finalized between the Company and the holder of the Convertible Promissory Note within 48 hours of the conversion
request. |
The
Company issued the foregoing securities pursuant to the exemption from the registration requirements of the Securities Act of
1933, as amended, available to the Company under Section 4(a)(2) promulgated thereunder due to the fact that such issuances did
not involve a public offering of securities, the shares were issued to a small group of persons and no solicitation or advertisement
was made in connection therewith.
Item
3. Defaults Upon Senior Securities
N/A
Item
5. Other Information
Subsequent Events
| |
● |
On
October 31, 2016, the Company issued an aggregate of 5 million (5,000,000) shares of common stock to an unaffiliated lender
pursuant to a Notice of Conversion whereby the lender elected to convert an aggregate of $5,000 of indebtedness of the Company
into such shares at a price of $0.001 per share under a Debt Conversion Agreement dated October 18, 2016 between the Company
and the lender. |
| |
|
|
| |
● |
On
October 31, 2016, the Company issued an aggregate of 5 million (5,000,000) shares of common stock to an unaffiliated lender
pursuant to a Notice of Conversion whereby the lender elected to convert an aggregate of $5,000 of indebtedness of the Company
into such shares at a price of $0.001 per share under a Debt Conversion Agreement dated October 19, 2016 between the Company
and the lender. |
| |
|
|
| |
● |
On
October 31, 2016, the Company issued an aggregate of 5 million (5,000,000) shares of common stock to an unaffiliated lender
pursuant to a Notice of Conversion whereby the lender elected to convert an aggregate of $5,000 of indebtedness of the Company
into such shares at a price of $0.001 per share under a Debt Conversion Agreement dated October 21, 2016 between the Company
and the lender. |
| |
|
|
| |
● |
On
November 1, 2016, the Company sold a Promissory Note to an unaffiliated lender for the aggregate principal amount of $12,500,
bearing interest at a rate of 8% per annum and maturing the first year anniversary of the date of issuance. The Company may
prepay the principal and accrued interest at any time without penalty. |
| |
|
|
| |
● |
On
November 1, 2016, the Company entered into a lease agreement with a corporation controlled by the Company’s Chief Executive
Officer. Pursuant to the lease agreement, the Company has agreed to lease the Company’s office space located at 420
Jericho Turnpike, Suite 110, Jericho, NY 11753 on a month-to-month basis for $750.00 per month. Either party may terminate
the lease agreement by providing 30 days’ prior notice to the other. |
| |
|
|
| |
● |
On
November 1, 2016, the Board of Directors of the Company appointed Dan Cohen as the Chief Operating Officer of the Company,
effective immediately. |
Since
2009, Mr. Cohen (57 years old), has been serving as Partner, Vice President and Director of Sales & Marketing for Newco Marketing,
Inc., marketing consultants, and manufacturer/distributor of an innovative home shower spa system, as well as service provider
of a remote computer support service. From 1988 to 2009, Mr. Cohen was a Partner and held the positions of Vice President and
Director of Marketing for Back To Nature Products Co., manufacturers of safer paint removers, lead abatement products and green
cleaners. Mr. Cohen has over 28 years of experience running the day-to-day operations of a company, including hiring personnel
and negotiating contracts. Mr. Cohen has proven success in the areas of marketing, sales, digital, direct response infomercials,
advertising, new product launches, and establishing both retail and commercial distribution. He is also a published author in
various trade publications and award winner of the QVC Hobby and Craft Recognition Awards.
On
November 1, 2016, the Company entered into a Management Services Agreement with Dan Cohen. In consideration for Mr. Cohen serving
as the Company’s Chief Operating Officer, the Company has agreed to pay Mr. Cohen $84,000 a year, accruing in equal monthly
increments of $7,000, plus 3% commission on gross sales, and to issue to Mr. Cohen an aggregate of one million (1,000,000) shares
of the Company’s Series D Preferred Stock, of which 100,000 shares were issued upon the execution the Management Services
Agreement and a Purchase Agreement (as defined below), with the remaining 900,000 incrementally vesting upon the achievement by
the Company of the milestones set forth below:
| 1. |
Execution
of this Agreement |
100,000
|
| 2. |
Complete
product line expansion with the development and introduction of “green line” products that complement our existing
line for use in commercial kitchens, the food service industry and other industries and produce Green Seal approved Eco-Logical
market ready inventory |
45,000
|
| 3. |
Sign
Northeast, USA Master Distributor |
75,000
|
| 4. |
Sign
Midwest, USA Master Distributor |
75,000
|
| 5. |
Sign
West Coast, USA Master Distributor |
75,000
|
| 6. |
Sign
Southern, USA Master Distributor |
75,000 |
| 7. |
Sign
Retail Distributor - Design and produce a retail package for in-store shelf and clip strip displays and place product in minimum
of five (5) retail outlets |
60,000
|
| 8. |
Sign
Regional Distributor for expansion into South America |
75,000
|
| 9. |
Sign
Regional Distributor for expansion into Europe |
75,000
|
| 10. |
Sign
Regional Distributor for expansion into the Middle East |
75,000
|
| 11. |
Sign
Regional Distributor for expansion into India |
75,000
|
| 12. |
Sign
Regional Distributor for expansion into Asia |
75,000
|
| 13. |
Redesign
the product for expansion into the municipal wastewater service industry and sign minimum of two (2) contracts with municipalities
within the industry |
60,000
|
| 14. |
Sign
contract with Infomercial production company for consumer products and launch the infomercial campaign with the first TV infomercial
broadcast |
60,000
|
| TOTAL: |
1,000,000 |
The
term of Mr. Cohen’s Management Services Agreement with the Company is for six months, commencing on the date of the agreement,
and automatically renews for successive one year terms unless terminated pursuant to the terms thereto.
| |
● |
On
November 1, 2016, the Company entered into a Restricted Stock Purchase Agreement (“Purchase Agreement”) with Dan
Cohen in connection with Mr. Cohen’s Management Services Agreement. Pursuant to the Purchase Agreement, the Company
issued 100,000 shares of Series D Preferred Stock to Mr. Cohen for a purchase price of $0.001 per share, which is equal to
the Stated Value of the shares, in consideration for services rendered to the Company by Mr. Cohen. |
| |
|
|
| |
● |
On
November 2, 2016, the Company entered into an Amended and Restated Management Services Agreement with Joel Falitz. In consideration
for Mr. Falitz serving as the Company’s Chief Executive Officer, President, Secretary and Treasurer, the Company has
agreed to pay Mr. Falitz a $31,200 signing bonus and a salary of $84,000 per year, accruing at $7,000 per month. In satisfaction
of the $31,200 signing bonus, the Company issued Mr. Falitz an aggregate of 31.2 million (31,200,000) shares of Common Stock
for $0.001 per share. Pursuant to the Amended and Restated Management Services Agreement, the Company also agreed to issue
to Mr. Falitz an aggregate of 900,000 shares of the Company’s Series D Preferred Stock, all of which vest in increments
upon the achievement by the Company of the milestones set forth below: |
| 1. |
Complete
product line expansion with the development and introduction of “green line” products that complement our existing
line for use in commercial kitchens, the food service industry and other industries and produce Green Seal approved Eco-Logical
market ready inventory |
45,000
|
| 2. |
Sign
Northeast, USA Master Distributor |
75,000
|
| 3. |
Sign
Midwest, USA Master Distributor |
75,000
|
| 4. |
Sign
West Coast, USA Master Distributor |
75,000
|
| 5. |
Sign
Southern, USA Master Distributor |
75,000 |
| 6. |
Sign
Retail Distributor - Design and produce a retail package for in-store shelf and clip strip displays and place product in minimum
of five (5) retail outlets |
60,000
|
| 7. |
Sign
Regional Distributor for expansion into South America |
75,000
|
| 8. |
Sign
Regional Distributor for expansion into Europe |
75,000
|
| 9. |
Sign
Regional Distributor for expansion into the Middle East |
75,000
|
| 10. |
Sign
Regional Distributor for expansion into India |
75,000
|
| 11. |
Sign
Regional Distributor for expansion into Asia |
75,000
|
| 12. |
Redesign
the product for expansion into the municipal wastewater service industry and sign minimum of two (2) contracts with municipalities
within the industry |
60,000
|
| 13. |
Sign
contract with Infomercial production company for consumer products and launch the infomercial campaign with the first TV infomercial
broadcast |
60,000
|
| TOTAL: |
900,000 |
The
term of Mr. Falitz’s Amended and Restated Management Agreement with the Company is for one year, commencing on the date
of the agreement, and automatically renews for successive one year terms unless terminated pursuant thereto.
Item
6. Exhibits
Index
to Exhibits
| Exhibit
No: |
|
Description: |
| |
|
|
| 10.1 |
|
Management
Services Agreement, dated November 1, 2016, between Ecosciences, Inc. and Dan Cohen |
| |
|
|
| 10.2 |
|
Restricted
Stock Purchase Agreement, dated November 1, 2016, between Ecosciences, Inc. and Dan Cohen |
| |
|
|
| 10.3 |
|
Management
Services Agreement, dated November 2, 2016, between Ecosciences, Inc. and Joel Falitz |
| |
|
|
| 10.4 |
|
Restricted
Stock Purchase Agreement, dated November 2, 2016, between Ecosciences, Inc. and Joel Falitz |
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|
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| 10.5
|
|
Lease
Agreement, dated November 1, 2016, between Ecosciences, Inc. and Preferred Distribution, Inc. |
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|
|
| 31.1 |
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Rule
13(a)-14(a)/15(d)-14(a) Certification |
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|
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| 32.1 |
|
Section
1350 Certification |
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|
|
| 101.INS* |
|
XBRL
Instance Document |
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|
|
| 101.SCH* |
|
XBRL
Taxonomy Extension Schema Document |
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|
|
| 101.CAL* |
|
XBRL
Taxonomy Extension Calculation Linkbase Document |
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|
|
| 101.LAB* |
|
XBRL
Taxonomy Extension Labels Linkbase Document |
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|
|
| 101.DEF* |
|
XBRL
Taxonomy Extension Definition Linkbase Document |
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|
|
| 101.PRE* |
|
XBRL
Taxonomy Extension Presentation Linkbase Document |
| * |
Furnished
herewith. Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed
not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933
or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
| Date:
November 4, 2016 |
By: |
/s/
JOEL FALITZ |
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Name: |
Joel
Falitz |
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Title: |
President,
Chief Executive Officer, Secretary and Treasurer |
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|
(Principal
Executive Officer) |
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|
(Principal
Financial and Accounting Officer) |
